Consumer Protection (Definitions of Goods and Services) Bill — In Committee 
Consumer Protection (Definitions of Goods and Services) Bill — In Committee 
[Volume:609;Page:6864] 
Consumer Protection (Definitions of Goods and Services) Bill 
In Committee 
Clause 1 Title 
GERRY BROWNLEE (NZ National—Ilam) 
: This title is completely inadequate for this bill. 
Government Members 
: Ha ha! 
GERRY BROWNLEE 
: Labour members immediately start thinking: “My gosh the member is on to something!”. We see them—the few there are here—suddenly sticking their heads up and thinking: “Heck maybe our Minister has made a mistake.” I have to say the Minister of Consumer of Affairs has made a terrible mistake in suggesting that this is a consumer protection bill. It is not about consumer protection. This bill seriously disadvantages consumers in New Zealand by containing a number of provisions that define certain goods and services as being covered by the relevant principal Act. It should be called the “Consumer Opportunity Denied Bill”. That would be a far better way to describe what is inside it. Over the next few hours as we discuss the various parts and clauses it will become evident to anyone who wants to listen that this bill is not good for New Zealanders. 
 The first point I want to make is about computer software being included as a good. I think that is the right way to go. When consumers buy software of course they should be able to expect that it will work. Of course they should be able to expect that that software will do the job that it is claimed to do. But in the same bill we see that telecommunications of any form are removed. I do not know how much members on the other side of the Chamber know about modern technology but let me make it very clear to them that unless there is good telecommunications access a large amount of the software that those consumers buy will be absolutely useless because it will not work without the telecommunication connection. So the poor old software manufacturers are being beaten about the head and told they have to meet the onerous requirements being put upon them by this bill but the people who actually deliver their service are not included. 
Similarly I note that water is now included in the bill as a good. 
John Carter 
: Water? 
GERRY BROWNLEE 
: Water. A lot of people will say that that is a good idea and that of course water that is delivered to people’s homes and residential areas should be of a particular standard. But I come from Christchurch and we have some of the best water in the world. Guess what? Our water will not comply with the requirements of this bill. 
John Carter 
: Why not? 
GERRY BROWNLEE 
: Because we do not have all sorts of purification chemicals tipped into it. We do not turn on taps in Christchurch and smell chorine. This bill will require that the Christchurch City Council tip buckets of chlorine into our drinking water in order that it comply with the water standards—that it get to the so-called A level—and therefore comply with the bill. I want to know whether Tim Barnett is going to vote for the Consumer Protection (Definitions of Goods and Services) Bill which in this particular instance is a clear attack upon the water that we in Christchurch drink daily weekly or as often as we can whenever we are there. He and I know— 
Clayton Cosgrove 
: It’s not often for that member. 
GERRY BROWNLEE 
: Clayton Cosgrove also knows—no he probably does not—that when we go to other parts of the country and taste the water which probably has an A standard we find that it is full of chemicals full of all sorts of junk that has been tipped into it. Because in Christchurch we have nothing other than pure water that comes straight out of our beautifully clean aquifers— 
The CHAIRPERSON (H V Ross Robertson) 
: This is a narrow debate. 
GERRY BROWNLEE 
: —our water will not comply with the Consumer Protection (Definitions of Goods and Services) Bill. So I cannot vote for it. This bill also includes a whole lot of electricity services. 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition will be strongly opposing not only the title of this bill but the content. During the Committee stage when we hope the Minister of Consumer Affairs will take a call we are going to bring to the attention of the Committee a number of examples of the increased cost to consumers that this bill will provide. This bill will increase the cost of services to all New Zealanders and that is why it would be better described as the “Consumer Protection (Increase in Costs) Bill”. That is exactly what this bill is going to do. 
During the debate on the other parts of this bill we are going to outline the cost to various local authorities in New Zealand of the foolish decision of this Government to include water and waste water as goods under the definitions of goods and services in the various pieces of legislation involved. The consequence of that is to say to the local authorities that supply water to New Zealand consumers that it must be of merchantable quality and for it to be of such a quality will require a number of local authorities— 
David Benson-Pope 
: What authorities? 
Hon TONY RYALL 
: —including that member’s local authority—to lift the standard of their water at a considerable cost. 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
Hon TONY RYALL 
: I am prepared to table a document which relates to the title of this bill that shows that local government bodies may be faced with a bill of $400 million to lift the level of their water supply so that it meets what is required in this bill. I bet Judith Tizard did not tell the Labour caucus that when she was briefing it on this bill. 
The CHAIRPERSON (H V Ross Robertson) 
: We are debating the title. 
Hon TONY RYALL 
: This bill will mean extra costs of $400 million over the next 5 years and that is why this bill should be called the “Consumer Protection (Rark up the Rates) Bill”. The sum of $400 million—that is what local government says—will be spent on upgrading water supplies in the next 5 years in order to meet the standards required by this bill. 
Georgina Beyer 
: That’s right! 
Hon TONY RYALL 
: Georgina Beyer from the Wairarapa is absolutely right. The sum of $400 million will be spent over the next 4 years and that will rark up the rates. 
This title does not reflect what is being proposed in this bill. This bill is about so much more than just adding items to the definitions of goods and services; it is all about gold-plating electricity gold-plating water and gold-plating gas and consumers will pay the cost. I have not met a consumer who has raised with me as an issue the quality of the gas he or she receives. I have not met a consumer who has raised with me as an issue the fact that he or she wants to pay a lot more to get a higher quality of water. I have met very few consumers who are in favour of paying higher electricity prices but that is what this bill will require. 
It is wrong for the Government to bring in a bill that does not correctly describe what is being proposed. The bill is complex and the Opposition requires the opportunity to take multiple calls in order to seek comment from the Minister because there are many many New Zealanders who want to know what is going on. Later I will table documents that show that local authorities that are found to be in breach of the guarantees of acceptable water quality standards may even though they have told their consumers about the problems with their standards still be found to be in breach of the quality standards and subject to considerable liability under these Acts. As a result they will be forced to spend substantial amounts of ratepayers’ money in order to meet drinking water standards. The Government has not thought through the consequences of this bill. I will also table documents from a gas company in a Labour member’s electorate that argue lucidly why the extension of this bill to gas is unnecessary has not been thought through and will cost consumers. 
The CHAIRPERSON (H V Ross Robertson) 
: Before I call the next member I point out that I have tried to indicate to members the narrowness of the debate on the title. I draw to members’ attention Speaker’s ruling 90/1 which states: “... when a bill has been considered by a select committee the debate on the title clause in committee is limited strictly to the elements of that clause and any amendments proposed to it.” That ruling was made by Mr Speaker Gray and also by Chairman Braybrooke. I am going to watch that very carefully. 
JOHN CARTER (NZ National—Northland) 
: Mr Chairman if you want to keep within the Standing Orders listen to this for the next 5 minutes. Here we go! We are debating the Consumer Protection (Definitions of Goods and Services) Bill. Is that OK so far? Very good—I have had the sign-off from the Chairman so I must be right. 
Hon Judith Tizard 
: You have used 15 seconds. 
JOHN CARTER 
: That is OK; it is not a problem. I have had a read of this bill and I worry about the way in which it is titled. In fact if we think about the words “consumer protection”— 
Stephen Franks 
: What about your mother? 
JOHN CARTER 
: No we will not worry about my mother at the moment. We will worry about protecting my mother a little later on in the debate. 
The problem with this bill is that in itself it cannot actually work. It cannot protect the consumer. Let me tell members why. This bill talks for example about the fact that one of the things the Government wants to do—if members look at the commentary—is class electricity as a good. So the intent of the bill is to ensure that consumers are protected and to make sure that they get the supply they need. So far so good—that is the purpose of the bill. The problem is that that means if one is to protect consumers to make sure they get the supply someone has to make the supply. If that provider of the service does not make the supply—if there is a default—the provider then is liable because it has not supplied the service. That is what the bill says. It is called a “consumer protection” bill. 
I put it to the Committee that at the end of the day someone will be fined. The authority will say to the electricity supplier: “You haven’t supplied the service to John Carter. He needs the service. You’ve failed; you get fined.” I ask members who will pay. The authority will write a cheque out for $100000 or whatever it might be—I think we just heard in the Fair Trading Amendment Bill (No 3) debate an amount of $200000—but who will pay? John Carter will ultimately pay because John Carter will have that amount spread on to his bill and I myself will pay for a service I did not receive. 
Now I ask the Committee: how can that be called protection? It is not protection. As a consumer of power I do not feel that under this bill I will be protected at all. Of course I want the supply but I do not want it to cost me any more. I do not want some legislation in this Committee consumer protection legislation that would add a cost to my bill just because the lights went out at some stage when someone said I had to have them on for 24 hours and therefore the supply authority was fined under the Fair Trading Act. How can that be protection? The authority gets fined—and I pay! I do not think that that is that funny. It is like saying to the neighbour: “You shoot down to the nearest shop and have a good time and I’ll pay.” I do not think that that is very much of a protection. [ 
Interruption 
] Well I was not going to quite go there but one can jump to the conclusion. What sort of protection is that? Here I am without a condom and I send a neighbour down the street. I mean that is not much protection. I tell members to follow the logic. This cannot be a “consumer protection” bill. It cannot be. 
By its very principle the legislation might intend to protect the supply. In the case of water it might intend to protect the quality of the supply. It might well intend to protect the discharge of waste water but ultimately it does not protect me from anything at all. I say to the Committee that the Minister has got the title of this bill wrong. If one wanted to call it the “Consumer Continuity of Supply Bill” one might well have a valid argument. But if the Government calls this measure “protection” the bill should be called the “Consumer Protection of Goods Bill”—or of supply or whatever—not the Consumer Protection (Definition of Goods and Services) Bill. To suggest that the consumer is being protected which is what this bill suggests is not right. As a consequence I want to move an amendment to omit the words after “Protection” and substitute the words “(Extension of Provisions) Bill” or omit the words after “Consumer” and substitute the words “(Miscellaneous Consumer Law Amendment) Bill” or omit the words after “Consumer” and substitute the words “(Extension of Definition of Goods and Services) Bill” because there is no consumer protection in this legislation at all. That is the problem. That is when we run into trouble. We do not have a proper definition of the bill and it needs to be defined. 
STEPHEN FRANKS (ACT NZ) 
: Mr Chairman I will maintain the tightness you asked for. This bill’s title is seriously deceptive. As one goes through each provision one finds it has exactly the effect that Mr Carter for the National Party just contended and ACT New Zealand opposes slogan law. This bill talks of protection without doing anything to deal with the matters raised in the first reading debate in the second reading debate and obviously by the Commerce Committee and some of the submitters to that select committee. 
If we look at the select committee’s report we see that it acknowledges the submissions that concern gold-plating mentioned by Mr Tony Ryall from National. It simply states blandly: “We do not consider the guarantee of acceptable quality amounts to a guarantee of ‘gold plated’ supply.” That goes to the core of whether this is an appropriate title for this bill because it states that the bill is for consumer protection. In fact the outcome has to be the prevention of consumers choosing what standard of service they want or what price they pay. If we take the example of electricity supply the supplier under this bill will be required to deliver a standard of service that will satisfy the hindsight judgment of any disappointed consumer claiming to be reasonable. We do not know what that level of reasonability is. 
Manufacturers will be responsible according to the select committee for failures that result from the acts of third parties or for events beyond human control. What was the classification of the near brownout conditions we had a month ago? Were they beyond human control or were they a product of the Government deciding to let one of its generators not generate over summer and wait for 600000 tonnes of Indonesian coal to arrive? Were they the product of factors outside human control when we know that if coalmines had been allowed to open—instead of being blocked by the Resource Management Act or having the Hon Chris Carter and his Department of Conservation stop access—there could have been more coal and there could have been more generation capacity? Is that within human control or outside human control? Certainly our near electricity shortage was very much within political control and ultimately when we imported all those shameful thousands of tonnes of Indonesian coal and started moving them up through the country from Tauranga it was quite plain that it was within human control to increase the output of power stations south of Auckland. 
So what is it that suppliers will have to consider when they look at this provision? Is a drought a matter that they will be liable for or is a drought a matter that the courts will hold is within human control? Why is it not left to consumers as it is now to contract with the supplier and for the supplier to set a price based on the effect that poor service would have on its reputation? Here is a Government that beefed up its Commerce Act as “consumer protection”. David Cunliffe even stuck a bizarre clause about consumer protection into the Commerce Act which no one can understand and then the Government having passed it it has suddenly decided that that will not be enough: “We know that was just a slogan; we know that was nonsense so we will stick in another piece of nonsense slogan. We will call a bill the Consumer Protection (Definitions of Goods and Services) Bill and we will persuade consumers that by passing laws we are protecting them.” 
There are no free lunches and this bill shows a classic case of what happens when politicians decide not to protect consumers but to befuddle them. This bill should have been called the “Consumer Deception Bill”. Consumer deception is what happens when people are told that a one-size-fits-all formula will be put across the legislation and then both consumers and producers are handed over to the mercies of lawyers and their hindsight judgment. When lawyers are the ones who decide what consumers ought to have wanted then in hindsight no one wins. The title we have here in fact—because the “Consumer Deception Bill” is possibly slightly wrong—should be the “Consumer Confusion Bill”. 
SANDRA GOUDIE (NZ National—Coromandel) 
: I was thinking about the title “Consumer Increased Costs Bill” but I concur with my colleague Stephen Franks that “Consumer Deception Bill” is a very appropriate title for this bill. I recall one of Stephen Franks’ comments in an earlier speech he made to the Parliament when he called the legislation the “Law of Unintended Consequences”. I think that is quite appropriate. So in referring to this bill as the “Consumer Deception Bill” I bring members’ attention to the submission from Local Government New Zealand which asks for the references to water and waste water to be removed from the bill. 
It did that specifically for a number of reasons and I want to draw to members’ attention some of those reasons. We will look first at section 11 of the Consumer Guarantees Act which is about “Guarantee as to price”. Local Government New Zealand wants to bring to our attention the fact that the setting of councils’ water standards prices etc. is determined by their communities of interest. That is particularly important for rural suppliers because often the rural supply is for their stock as well as for domestic purposes and they accept a standard that is below the norm. If someone decides that he or she does not like that standard and wants to make a claim against a council what is the council’s position? It concerns one consumer that the council does not deal with on an individual basis. Councils deal with consumers as a whole. The decision with regard to water supply standards for any given area is based on the majority of that community making that decision. Therefore the contract is entered into by a majority of the community and not by an individual consumer. The local government authority questioned how that would be dealt with and felt that the provisions about water and waste water had a cost. If a consumer can challenge a local authority based on that supply provision under section 11 there is a cost to the community if the community is then required to pay for it—if the council is deemed to be liable. There is an added cost because the local authority will then have to expend inordinate amounts of money to bring that water supply up to standard. So those are all costs that come about from one consumer’s ability to make a claim against a local authority. 
The CHAIRPERSON (H V Ross Robertson) 
: This is a very narrow debate. 
SANDRA GOUDIE 
: OK. I turn to some of the other aspects that Local Government New Zealand raised. Of course my learned colleague has already mentioned the $400 million bill that Local Government New Zealand has recognised as being a part of this cost. Those are all costs that will go on to consumers as a consequence of this bill. 
The CHAIRPERSON (H V Ross Robertson) 
: The member must talk about the elements of the clause. 
SANDRA GOUDIE 
: This is the “Consumer Deception Bill” because consumers are not aware of the costs that will be imposed on them through local authorities as a by-product of this bill. It is a deception. It is a deception on all those consumers. It will be a by-product of this bill but they are unaware of it. They are unaware of all its inherent costs which come through because there is uncertainty about how those matters raised by Local Government New Zealand will be dealt with. Section 11 is a prime example of that in relation to price. 
Some other matters are also of concern. One is the fitness for a particular purpose contained in sections 6 and 7 particularly section 7. Local authorities are to be subjected to all of those provisions and will have to meet all those standards for one consumer when the majority of the consumers have made the decision. It comes back to the “Consumer Deception Bill” that Stephen Franks was talking about. What happens if the local authority is supplying water to a particular consumer there is a force majeure—weather conditions cause the water to be of a standard below that guaranteed—and one consumer holds the rest of the consumers to ransom? It is a deception. 
GEORGINA BEYER (NZ Labour—Wairarapa) 
: I move  
That the question be now put 
. 
The CHAIRPERSON (H V Ross Robertson) 
: In the faint hope that someone will speak to the title I will give the call to the honourable member John Key. 
STEPHEN FRANKS (ACT NZ) 
: I raise a point of order Mr Chairperson. I took from that an inference that no member had yet spoken to the title. 
The CHAIRPERSON (H V Ross Robertson) 
: No that is not a point of order and that is not the insinuation that was meant. 
JOHN KEY (NZ National—Helensville) 
: As the Chairperson quite correctly pointed out I rise to take part in the title debate on the Consumer Protection (Definitions of Goods and Services) Bill. If I reflect on that title I can see quite a bit of merit in it. I do not like to agree with the Government and praise it and I certainly would not do that in normal circumstances but I can see some logic in the title. 
Hon Member  
: The member has been lobbied. 
JOHN KEY 
: I have been lobbied from time to time. I can certainly see that there is an attempt in this bill to make the definitions of goods and services clearer and that some quite interesting goods will be defined as a result of this bill. 
A lot of discussion has taken place tonight about electricity. Electricity has been defined as a good but equally defined under the legislation with its wonderful title are gas telecommunication services water and also—most importantly indeed—computer software. Far be it from me to say that the definition of goods and services is not at least discussed in the bill and it is in some way fitting that those words should be in the title. Like other speakers tonight where I would express some concern about the title is in respect of the use of the words “consumer protection”. One has to ask oneself whether consumers are truly being protected. There is certainly an attempt to protect them through continuity of supply although as we have heard from various speakers it is very unlikely that that would take place. [ 
Interruption 
] The Labour senior whip needs protection and I can understand that. However I am not sure that he is defined as either a good or a service. I am sure he needs protection but let me not detract from this wonderful dissertation. 
Hon Judith Tizard 
: He provides great services of very high quality. 
JOHN KEY 
: Does he? I was not aware that he provided services of great quality. I do not know whether consumers are protected by him but I will take it that they are. Consumer protection conjures up in my mind the concept of someone with a shield a weapon—some sort of a white knight riding out into the sunset to protect the poor and lonely consumers as they huddle around the fires that are not going the computer software that has blown up in their faces the water that is undrinkable or the gas supply that has been turned off. Will that happen as a result of this bill? I think not. At the end of the day no one can absolutely guarantee that the lights will be on. The lights are on in the Labour Party but is anybody home? That is the obvious question but the answer is not obvious. They have some wonderful members who from time to time make a stunning contribution on the odd bill but generally speaking the lights are on but no one is home. 
That has to be very much the same situation under the Consumer Protection (Definitions of Goods and Services) Bill. Where is the discussion about insurance companies and the role they could have played if they had the opportunity to protect consumers? That is what insurance companies do; they offer protection. They do not offer the faint hope that the lights will never go out that computer software will never go down that the gas will not work or that the water will not be of wonderful quality. Insurance companies are there to protect consumers when things go wrong. For the poor consumer who is at the moment huddled around his or her computer looking to log on; the poor consumer who has turned on the gas fire but it is not working; the poor consumer who is wanting to turn on his or her stove as we speak the Consumer Protection (Definitions of Goods and Services) Bill is not providing them with that protection because it cannot if the power is not on. Consumers must therefore look to an alternative source. 
I am not sure that this bill does absolute justice to what could take place. I can see that many consumers at the moment are feeling a sense of security but they have been wronged by this legislation. They will not have continuity of electricity supply or the quality of water that they require. There is nothing nicer than going home on a cold night and having a glass of water. 
TIM BARNETT (NZ Labour—Christchurch Central) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 1 be agreed to: 
to omit the words “(Definitions of Goods and Services)” and substitute the words “(Extension of Provisions)”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 1 be agreed to: 
to omit the words after the word “Consumer” and substitute the words “Miscellaneous Consumer Law Amendments”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 1 be agreed to: 
to omit the words after the word “Consumer” and substitute the words “Extension of Definitions of Goods and Services”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 56 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8; Green Party 9. 
Noes 60 
Labour 52; United Future 8. 
Amendment not agreed to. 
Clause 2 Commencement 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition has moved a number of amendments on the commencement date of this bill and I would like to explain each of those amendments which are in the name of the honourable John Carter. 
One of the points that we intend to make during the process of this bill is that there is quite considerable concern in local government about the inclusion of water and waste-water provisions in it. Those concerns stem from a number of situations. Possibly the most important of them is that councils feel that they have not had sufficient time to prepare their operations for the passing of this bill. As officials advised the Commerce Committee many councils supply water that is not of a saleable quality. The document I have here gives the exact phrase: “water has to be supplied of an acceptable quality”. We believe it is appropriate to give councils an opportunity to come to terms with the full ramifications of this legislation and we have an amendment that proposes that. While the Government can get its way with the rest of the extension of goods and services we would pull out water and waste water and allow those to be brought into the bill at a later date by way of Order in Council. That would provide that Government and local government—in the sort of love-in partnership that they like to talk about—could equate this bill with the reality of the challenges that face councils that supply water. It would allow them sufficient time to do so before that “acceptable quality” issue really raises concerns for them. 
We also have another couple of amendments that would move the start-date of this bill beyond the next election because I am quite confident that the next National-led Government which will be returned to office in 2005 will— 
David Benson-Pope 
: Even the  
Herald 
 says you haven’t got a chance. 
Hon TONY RYALL 
: I do not take my directions from the New Zealand Labour Party  
Herald 
 thank you very much or from the Television New Zealand Labour Party. But I know that when the National-led Government is back in power in 2005 we will have to remove those definitions that include water and waste water because we think they are wrong. We have put forward these amendments for a number of reasons. We want to defer the start-date so that the next Government can remove the ridiculous parts of this bill in time to avoid a huge consequence for consumers. We have put forward another amendment that would exclude water and waste water from the requirements of the Consumer Guarantees Act the Commerce Act and the Fair Trading Act. 
While it is not particularly relevant to this debate on the commencement there is a considerable concern amongst members on this side of the Chamber about the proposition that amendments are being made to these bills for the avoidance of doubt. Frankly there is doubt and the only way that the Government can claim that those matters are already covered by the bill is through the opinion of officials. That is not good enough and we will be talking about that later on. 
When we look at the costs to local government we need to remember that we have an official document here that says that local government will have to spend $400 million over the next 5 years on water and waste-water services. That is an incredible cost per ratepayer. We are seeking information to try to equate that for each district in New Zealand so that members opposite can be aware of what that cost will mean. Because of the confusion about what the cost will be for the Christchurch Dunedin and Palmerston North city councils and other authorities to bring their water up to an acceptable standard as required by the Consumer Guarantees Act the Fair Trading Act and the Commerce Act we should defer the start of those provisions in this bill. 
I urge the Committee to support the amendment in the name of Mr John Carter because it just makes sense. There is considerable confusion. Even the Minister cannot take a call to explain what will happen with water and that is why this action should be taken. 
JOHN CARTER (NZ National—Northland) 
: 
 I want to take an opportunity to speak to this part because as my friend and colleague the Hon Tony Ryall said there are three amendments in my name. The first is to ask for the bill not to come into force until 1 January 2006. I ask the Minister to give this amendment serious consideration because there are some issues of major concern in the bill and those who are likely to be affected do need time to get a better understanding of it. It seems reasonable that the Minister could give some time for those people to get an understanding of and therefore a feel for where this bill will go and what impact it will have. So I say that the date the bill should come into force is 1 January 2006 and that means that when the Government changes at the next election we will be able to repeal this bill so that it will not have any impact at all. That seems to make a whole lot of sense to me. 
In the event that I just cannot persuade the Minister to accept that date I have a fallback date of 1 July 2004. One should always have a back-up. The reason for that is that I know that the Minister in the chair Judith Tizard is a reasonable person. She considers very sensible— 
Hon Mark Burton 
: Can you write that one down? 
JOHN CARTER 
: Now I did not say that—it was not me who said that! This Minister considers serious amendments and I am absolutely certain she will very likely allow this one to be accepted. Changing the date by 12 months to 1 July 2004 will not make a significant difference. It is a genuine amendment to allow people at least 12 months to get their heads around what this measure means and what impact it will have. 
As the Hon Tony Ryall has already told the Committee there is the issue around the matter of water and waste water and the very genuine concern that has been put forward by Local Government New Zealand. I wonder whether the Minister could take a call. In the last few minutes of my speech she may get some advice from the officials as to what communication they had with Local Government New Zealand on this matter. Did the officials fully understand the impact this would have on ratepayers across the country? I am not certain that that has been understood. 
Hon Tony Ryall 
: It could be $30 million in Dunedin alone. 
JOHN CARTER 
: Good grief my colleague the Hon Tony Ryall is now telling me it could be as much as $30 million in Dunedin! Bless my soul—$30 million! I wonder what the member for Dunedin South David Benson-Pope thinks of imposing $30 million on the Dunedin City Council as a consequence of this bill. That is just the Dunedin City Council—just one city. I wonder whether the Minister in the chair has told that member that this bill could have an impact as great as $30 million on Dunedin City. 
Hon Tony Ryall 
: And $7 million in Southland district. 
JOHN CARTER 
: Well let us just focus on Dunedin City. If it is going to be $30 million in one city alone over a 3-year period— 
Hon Tony Ryall 
: Until 2005. 
JOHN CARTER 
: So it is basically 2 years. That is $15 million extra a year that the ratepayers will have to meet. This is to upgrade the water supply one assumes to meet the standards set in this legislation. We have to ask ourselves what is wrong with the water. How many people in Dunedin are dying every day because they drink Dunedin water? I know it does strange things to one or two people who live down there if we have a look at the member but the point is that if this bill imposes that sort of cost on the people of Dunedin they have a right to know. 
If this bill is passed tonight at least it is not unreasonable to allow my amendment. At least the people of Dunedin can then be advised of it plan for it and put it into their accounts because this bill will have a significant impact on each of them individually as ratepayers. Maybe the Minister will take a call and explain to me why it is not going to happen like that. I would be pleased to hear. We would probably think it was OK if there were a rational reason for it. If I have it wrong I would like the Minister to take a call and tell me I am wrong. 
Hon JUDITH TIZARD (Associate Minister of Commerce) 
: I thank members for their intense interest in this bill. It is interesting that the Commerce Committee received 22 submissions on it. I understand that 10 requested to be heard. These matters—particularly the one raised by John Carter—were dealt with at some length in the select committee. I think most New Zealanders have got to the point where we are all a bit impatient about local authorities and private water suppliers who are not meeting reasonable standards. I think many have been dragging their heels for many years. I personally remember  
Consumer 
 magazine many years ago pointing out that local authorities around New Zealand had very variable standards. New Zealanders are entitled to see the intent of the Consumer Guarantees Act that was passed in 1993. That Act was intended to cover all goods and services ordinarily supplied in trade to domestic consumers in New Zealand. A number of areas have been disputed through the courts. 
The effect of this bill is to clarify those definitions of goods and services that are covered by the Consumer Guarantees Act the Fair Trading Act the Commerce Act and in one or two cases the Sale of Goods Act. I think it is very important that water and waste water are included. I understand that one of the very good reports the select committee heard was from the Ministry of Health. That report informed the committee that the ministry was preparing a Health (Drinking Water) Amendment Bill for introduction to the House. The ministry saw the bill that is before us today as compatible with that bill. That bill would provide a 5-year phase-in period for suppliers to comply with the requirements to introduce public health risk management plans and to take all practicable steps to comply with the drinking water standards. I do not think that is an unreasonable requirement. I think that New Zealanders are sick of the fact that a few local authorities have failed to take good steps. All reasonable people understand that acts of God accidents or incidents will happen that will affect the quality of drinking water. The courts have indeed found that the demands of one or two for a particular standard of drinking water for a particular purpose will not be enforceable. It is an obligation on those people to do their own water treatment. 
So I am very happy with the work of the select committee. It was thorough and it looked at all the issues in the bill before us the Consumer Protection (Definitions of Goods and Services) Bill. It is a good bill that amends four Acts to make them work alongside each other. It clarifies issues that a variety of court cases have raised. Some of them excluded some goods and services and others included some of them. This will be an excellent consumer protection measure. It is a well-named bill and it is a well-examined bill. It should be passed promptly. 
SANDRA GOUDIE (NZ National—Coromandel) 
: I concur with my colleagues: we do need to delay the commencement date of this bill. There are some serious questions that need to be answered here. 
One of the glaring omissions in this bill is a compliance cost report—there is not one. Absolutely no assessment has been done of what this will mean to the average ratepayer let alone the consumer. When there is a substantial submission from a body like Local Government New Zealand we do need to take some heed of that. That body is majorly concerned about the impact and this bill should be delayed until all the questions asked by Local Government New Zealand have been answered. It has asked a huge number of questions and it has not had an answer. How could it possibly get an answer when the Government cannot even include a compliance cost report in its presentation of a bill? I thought that was mandatory; maybe I am wrong. 
This is not necessarily about standards but the question of water standards has failed to be defined. A local authority has a range of different standards going from (a) to (e). In a rural area it is possible to accept a rural water supply that does not actually meet a potable water standard. The local body does not have to meet a particular standard. However if the community accepts a rural water supply for animal consumption and one consumer says “I’m sorry that is not acceptable” then that one consumer gets the opportunity to hold the rest of that community to ransom. Not only that but section 11 of the Consumer Guarantees Act states that if a consumer deems the cost of that water to be unreasonable he or she can refuse to pay. Where will that leave a local authority when it has a responsibility to the community as a whole? Its contract is with the community as a whole. The question has not been answered about which Act will prevail in that situation—the Rating Powers Act or the Consumer Guarantees Act. That question has not been answered by the Minister in the chair Judith Tizard and I think it would be good for her to answer some of the questions that have been raised by Local Government New Zealand. It is majorly concerned and that is not the only question it has raised. 
It has also looked at the costs that will be incurred as a result of this bill. I have here a paper provided by my learned colleague the Hon Tony Ryall which states: “The cost of upgrading all of the water supplies in the country has been estimated at about $750 million.” We have gone from the $400 million identified in the Local Government submission—recognising that it was $30 million for the Dunedin water supply alone—and now we are looking at an estimated cost of $750 million. Upgrading a small water supply can cost upwards of $2 million if the supply is to meet the upper range of the standards and depending on how a local authority is structured that can be a huge burden on a small community with the ones that suffer being those that are on a fixed rate. 
Those are the very reasons that it should have been explored and a compliance cost report carried out. If a report was done it should have assessed all those impacts and worked in conjunction with local government. That is one of the key reasons that the commencement date should be set way out into the future. A compliance cost report needs to be done. The Government should be working in tandem with Local Government New Zealand in assessing what this will mean to ratepayers which Act will prevail—the Rating Powers Act or the Consumer Guarantees Act—and why the water and waste-water provision is not incorporated into the Local Government Act of 2002 which has recently been passed. In my view it has been a failure on the part of the Government to adequately consult Local Government New Zealand on all those aspects and to answer its questions. 
National initially supported this bill to go to the select committee— 
Hon Judith Tizard 
: National sneers and derides at local government. 
SANDRA GOUDIE 
: We hold local government in high regard and one of the reasons— 
Hon Judith Tizard 
: Ha! 
SANDRA GOUDIE 
: Yes we do. Absolutely. [ 
Interruption 
] 
GERRY BROWNLEE (NZ National—Ilam) 
: I raise a point of order Mr Chairperson. Will it be your practice to allow Ministers in the chair to use the microphone to make derogatory comments about members on their feet and to question their intention and their integrity in the Committee? 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member. I had my hand on the microphone button. 
GERRY BROWNLEE (NZ National—Ilam) 
: I raise a point of order Mr Chairperson. What about getting your hand off the button and on the pulse because the Minister was extremely insulting to the National Party and we would like a withdrawal and an apology. 
The CHAIRPERSON (H V Ross Robertson) 
: As far as I am concerned there was an exchange between the two members and it was robust debate. I did not take any offence at it. 
GERRY BROWNLEE (NZ National—Ilam) 
: I raise a point of order Mr Chairperson. With all due respect to the Chair it is the National Party that has taken offence. If members take offence members’ words must be accepted and I believe it is incumbent upon you as the Chairperson of the Committee to require the Minister to stand withdraw and apologise. Otherwise where does decorum go? 
The CHAIRPERSON (H V Ross Robertson) 
: If the member has taken personal offence I ask the member to withdraw. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: I withdraw. 
SANDRA GOUDIE (NZ National—Coromandel) 
: I raise a point of order Mr Chairperson. I do take offence because I hold local government in great regard and— 
The CHAIRPERSON (H V Ross Robertson) 
: I say to the member that under  
Speakers’ Rulings 
 offence must be taken at once not later. 
STEPHEN FRANKS (ACT NZ) 
: I rise on behalf of the ACT party to consider the commencement date of the Consumer Protection (Definitions of Goods and Services) Bill. This is the bill that does what the drafters of the Consumer Guarantees Act deliberately decided not to do back in 1993: it overextends what might have been a good idea for a standard form of contract for consumer services whereby consumers would have been able to shop around into areas where in effect the service has to be universal. The introduction of this bill should be deferred because it will have so many unintended effects. 
Although the Minister in the chair the Hon Judith Tizard may not be knitting today I am quite sure that she cannot have paid much attention to this bill. She cannot have considered that there will be a host of unintended consequences when the bill commences like that faced by the “People’s Republic of Christchurch” in its recycling scheme under the Consumer Guarantees Act. The Christchurch worthies set up a recycling scheme which was running in very good order until someone found that with the whiteware and other products that were being recycled with volunteer labour—and indeed the volunteers were eventually being paid for their labour—they fell foul of the so-called consumer protection laws. They could not satisfy the after-sales service requirement they could not give a warranty as to merchantable quality and even though people were perfectly prepared to take the risk of low quality in return for low price they were not allowed under that so-called consumer protection law to contract out of the obligations that simply could not be satisfied by a recycling scheme. 
I urge the Minister to take the National Party amendments seriously. She may consider that they are just intended to harass or to reduce or defer the inevitable but the inevitable might mean for example that the Minister could get a chance for local authorities to look at whether their ratepayers really do want to have a one-size-fits-all warranty slapped across the supply of water. Local authorities should have an opportunity to deal with what this bill requires—to go out to the consumers and to give them a full description of the risks they face so that the reasonable consumer will not be fronting up and claiming a guarantee or an obligation on the part of the local authority the electricity supplier or the gas supplier that is far more expensive to everyone than they would ever have dreamt of. 
If this bill’s commencement were to be deferred it would allow the principal Act the Consumer Guarantees Act to operate in the way that has been contemplated which would mean that the suppliers could go out and use some of the exceptions in the Act. For example they could make a statement about the goods on any packaging or labelling or a representation about the goods that would notify the consumer of any defects that may have been specifically drawn to their attention by the manufacturer. Is the Minister comfortable that local authorities and the other suppliers of those services have had an opportunity to consider those exceptions given that this bill was introduced back in 2001 that it sat waiting as a slogan all that time that it had a pathetic consideration by a very weak select committee to which the smartest and brightest members were too busy to turn up and that there is no urgency— 
Hon Harry Duynhoven 
: Who are the smartest and brightest? 
STEPHEN FRANKS 
: Obviously the Hon Richard Prebble. He was too busy to turn up. 
The select committee has not properly grappled with the issues that were raised in submissions. If this bill were to be deferred long enough for the people who will become subject to it—and for those who in turn will get the cost of an overreach in the guarantee—to go through and make sure that all their standard-form contracts labelling warnings and defect descriptions were in order there would be advantage to everyone. 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: I move  
That the question be now put 
. 
GERRY BROWNLEE (NZ National—Ilam) 
: Although I would like to say that this bill should never commence that it should have no commencement date I accept that the Government is hell-bent on driving it through this Committee. I want to know why Tim Barnett Ruth Dyson Lianne Dalziel and Clayton Cosgrove are going to vote for such a patently anti-Christchurch bill. 
Hon Judith Tizard 
: Oh! 
GERRY BROWNLEE 
: The Minister shrugs her Auckland shoulders in a sort of mock profanity but the truth is that coming from Auckland she has no idea what exists south of Wellington. She is a unique Aucklander because she gets down to Wellington on a regular basis although it is not as regular as some might expect. As the previous speaker pointed out we have a bill here that will absolutely destroy the recycling programme in Christchurch. Countries all over the world have problems with the disposal of whiteware. A programme was put together in Christchurch that will enable those who are less well off to have a fridge that might last an extra 6 8 12 or maybe even 24 months but no that programme has been scuttled sent off to the landfill because of a bill like this. 
As I said before there is also the issue of water. This bill will cost the Christchurch City Council—and at the end of the day that is every ratepayer in Christchurch—$5.241 million to comply. What does the council have to do to comply? It has to supply to the community water that meets or surpasses New Zealand drinking-water standards. On the face of it everyone would say that is a good idea a wonderful idea but in order to meet New Zealand drinking-water standards the Christchurch City Council would need to tip into the water supply large quantities of chemicals designed to take out all sorts of nasties that do not exist in Christchurch water. That is why I will not support this commencement date. A group of Auckland MPs have decided that they want to lower Christchurch drinking-water standards to the same level as their own. 
Stephen Franks 
: They wouldn’t even drink tap water. 
GERRY BROWNLEE 
: There we are! My colleague Stephen Franks has announced that Aucklanders do not drink tap water. 
Hon Judith Tizard 
: They do; all the time. I do. 
GERRY BROWNLEE 
: That may explain a lot. The Minister says she drinks Auckland tap water—there is a perfect out. I do not want to get into slagging off various other communities but I do want to make the point that Christchurch has the best drinking water of any city or any province in the country. Marc Alexander the United Future member nods to that but he will vote for this bill which requires the Christchurch City Council at an expense of some $5.241 million to tip additional chemicals into our water. Why should anybody who comes from the city of Christchurch be expected to support this commencement date? I do not think there is any reason whatsoever to do that. 
I am happy about the waste-water provisions in this bill and I am happy about a number of the other consumer protections that exist in this bill. But it is the stupidity of including something like water; the stupidity of excluding State generators as manufacturers of electricity from any scrutiny; and the idiocy of taking out of the bill the telecommunications broadband around the country that also make it totally unacceptable to support the bill’s introduction on the date proposed. I would like the Minister to stand up and tell us whether the officials did any sort of analysis of water quality throughout the country. Were those New Zealand standards—which incidentally give Christchurch water a rating of B—well considered at any time by the officials? 
Hon GEORGINA TE HEUHEU (NZ National) 
: I am very pleased to take a call on this bill. Although I was not here to take a call on the title I will say that there could not be a title that was more in opposition to what this bill proposes to do. However we are now debating the commencement date and as my colleague said previously National does not support the commencement date and there are a number of reasons for that. 
We supported the bill in its first and second reading and we did so because we thought that the underlying intention of the bill was right. But now we have it here for its Committee stage and presently for its third reading and we have come to the conclusion that if the bill were to pass there would be too many unfavourable repercussions. The bill has a reasonable intention but National thinks that the unintended consequences will be substantial and we do not support the commencement date for that reason. 
I make reference to the amendment that has been proposed by my colleague John Carter. There are three parts to it. The first puts the commencement date out to 1 January 2006 and the reason is that first of all—[ 
Interruption 
] Well of course we will be the Government by then and we will repeal it. Underlying this debate is the concern that this bill does not protect the consumer at all. Indeed it will lead to increased compliance costs for the electricity and gas suppliers. Let us be honest—they are not going to absorb those costs. They will pass them on to the consumer and that is why I said at the beginning of my speech that the title of this bill is so wrongly stated. There is no protection at all for the consumer. 
My colleague John Carter has proposed that we change the commencement date to 1 January 2006. 
Hon Tony Ryall 
: That makes sense. 
Hon GEORGINA TE HEUHEU 
: Of course it does. My colleague John Carter would not have proposed it if it did not make sense. It makes absolute sense. We have a situation where Dunedin is budgeting $30 million to upgrade its water to meet the quality required by this bill and that is a huge amount of money. 
David Benson-Pope 
: It has been doing it for years. 
Hon GEORGINA TE HEUHEU 
: It is a huge amount of money—and why should Dunedin be forced to do that when we could come up with a better result if we thought about what we are doing here a lot more carefully? 
David Benson-Pope 
: Dunedin wouldn’t have to do that if it hadn’t been made to sell its dam by the National Government. 
Hon GEORGINA TE HEUHEU 
: Mr Chairman is that member going to take a call or is he just trying to close this debate down? 
The CHAIRPERSON (H V Ross Robertson) 
: He may do. 
Hon GEORGINA TE HEUHEU 
: He may do but my experience is that he never does so I would appreciate it if he would let me have the rest of my say in peace. In any event as I say that is what Dunedin is budgeting for. Goodness knows what all the other local authorities will have to budget for this but suffice it to say that if Dunedin is budgeting $30 million then the major metropolitan areas will have to budget that same amount if not more and I do not think that is at all fair when ultimately the cost of that will be passed on to the consumer. There was an issue about the Rotorua eastern suburbs— 
Hon Tony Ryall 
: It gets an “E” for water quality. 
Hon GEORGINA TE HEUHEU 
: It gets an “E” for water quality. How much will that cost Rotorua? Perhaps the member for Rotorua will be able to take a call and enlighten us on that because that is a real concern. Smaller places like Rotorua cannot afford those sorts of costs. Rotorua might look like a wealthy place but it is not. There is a lot of unemployment there and this Government has not done anything much about that since it has come in. I come back to my original point which is that National thinks that the commencement date should be delayed. If the Parliament is not in agreement with a delay to 1 January 2006 then it should be delayed until 1 July 2004. 
STEVE CHADWICK (NZ Labour—Rotorua) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of John Carter to clause 2 be agreed to: 
to omit the words “the day after the date on which it receives the Royal assent” and substitute the words “1 January 2006”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 34 
New Zealand National 26; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of John Carter to clause 2 be agreed to: 
to omit the words “the day after the date on which it receives the Royal assent” and substitute the words “1 January 2004”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 8. 
Noes 69 
Labour 52; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of John Carter to clause 2 be agreed to: 
to add the words “ except for provisions affecting water and wastewater which will come into effect by Order in Council”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 34 
New Zealand National 26; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Clause 2 agreed to. 
Part 1 Commerce Act 1986 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition is strongly opposed to Part 1. We do not support the incorporation of gas electricity water and software in the Commerce Act nor do we support the inclusion of those items as services for the purposes of the Commerce Act. 
We have very real concerns for example about including electricity in the legislation. As I think the New Zealand Law Society pointed out to the select committee of its nature electricity is not the tangible sort of good that the Commerce Commission should be dealing with. The Minister will require such a high standard of electricity delivery that companies will not be able to meet it. Electricity is a good in a less than perfect way. For example if a lines company fails and one gets an unplanned outage how can that be deemed to be of an acceptable quality? Yet there will be a liability there for the electricity company. There might be a planned interruption to supply for which notice has been given to allow for maintenance work to be carried out. That is not the sort of thing that happens with any other goods. 
If members look at what this bill is proposing they will see that it states that those goods will be fit for the purposes for which they are supplied acceptable in appearance and finish free from minor defects and safe and durable. None of those things can be applied to electricity. Electricity is not “acceptable in appearance and finish”. Can it be free of minor defects safe durable and fit for the purpose for which it is supplied? Maybe but because of its unique features electricity cannot be geared to the specific needs of consumers. Electricity is inherently unsafe and can only be made safe by infrastructure and equipment which are safe services in themselves. It is inappropriate to try to include intangible items like electricity and gas in this legislation. The Government has agreed that telecommunications is an intangible that should not be included under the definition of a good. We say that the same should apply to electricity and gas. 
I stand with the New Zealand Law Society which told the select committee that the provisions in this bill are unlikely to provide any real advantages to consumers. As Mrs te Heuheu said the extra costs that will be put on electricity companies will be passed on to consumers. When there is an outage and people’s computers lose information fridges blow or microwaves fail consumers and shareholders will pay because of this legislation. It means that prices will rise. Not only will the price of electricity rise because of the special tax that the Government is putting on—that is one of the 15 new taxes or levies that the Government has applied since it came to power—but there will also be an indirect form of tax from this bill in the sense that prices will go up. 
The concerns we have made known in respect of electricity can also apply to water. In order to get its water quality up to the level required by this bill the Dunedin City Council is budgeting $30 million in the next 2 years. In Motueka the council is budgeting $6 million—that is $100 a ratepayer—to get its water up to the sort of quality that this bill requires. We know that Banks Peninsula is bracing itself for a $4.5 million drinking water upgrade under the proposed new laws—Banks Peninsula $4.5 million; Motueka $6 million; Dunedin $30 million. That is what this bill is doing—so much so that Mrs te Heuheu will table a document that estimates that it could cost $750 million for local authorities to bring their water supplies up to the level that will be required by these bills—that is the Fair Trading Act the Commerce Act and the Consumer Guarantees Act. This Government does not realise what it is doing with this bill. 
BRENT CATCHPOLE (NZ First) 
: I am rising to speak to Part 1 because I have just listened to National’s Tony Ryall speak about how unstable unsafe and unreliable electricity is. Sure it is dangerous but I have to remind Mr Ryall and the National Party that Auckland suffered huge blackouts during the 1990s. It was not as a direct result of the weather or of anything other than poor management and poor supply. The poor supply was a case of the companies holding back on their upgrades of the lines because they wanted to retain all their profits and they failed to see a catastrophe coming. All of a sudden one line blew. That put extra pressure on other lines and they blew. As a result Auckland was without power. Generators from outside Auckland and from overseas had to be brought in. A ship was even docked in the port to supply power to Auckland. 
If that is the direct result of bad weather and bad supply then I really have to question Mr Ryall’s intentions. We all accept that electricity is unstable but it also relies on the good management of the supply companies. In that case New Zealand First supports this part. We see it as providing much-needed security for electricity supply as a good and a service. We therefore support this bill. 
GERRY BROWNLEE (NZ National—Ilam) 
: In speaking to Part 1 I want to pick up on a couple of comments made by my colleague Brent Catchpole who was on the Commerce Committee right through the process of the bill. 
Brent Catchpole 
: Only the latter part. 
GERRY BROWNLEE 
: Perhaps that explains some of the member’s contribution tonight. One of the interesting things about this bill is that the term “manufacturer of electricity” is not in the bill. “Supplier” is there as is “provider” so that captures the lines companies and local energy companies. But the manufacturer—the State generator—is out of it. The reason is that this Government knows that the whole infrastructure of electricity in this country has turned into custard in the last 4 years and we have seen no new investment in generation. For each of those 4 years we have needed some 150 megawatts of new generation about 450 megawatts in total and what have we had? We have had about 100 megawatts. If this bill had been effective on the manufacturers the generators from the start of this winter then the Government would have faced a very huge bill indeed as consumers decided to exercise their protection under this legislation against the manufacturers. 
So I think we are seeing here another one of the Labour Party’s “dress it up and hope it looks good” types of bills. As our colleague Tony Ryall has pointed out—that is the Hon Tony Ryall the last great Minister of Commerce that this country has had— 
Hon Tony Ryall 
: I was never Minister of Commerce; I was the Minister of Justice. 
GERRY BROWNLEE 
: He was the Minister of Justice but as such he knew more about commerce than the present Minister knows about her own city. It is unbelievable. 
The real point here is that in a few minutes Georgina te Heuheu will table a document that outlines the extraordinary costs that this legislation will put upon South Island councils in places where there is no worry about water quality—although they most definitely have a worry about water quantity. We will see Marc Alexander Clayton Cosgrove Tim Barnett Ruth Dyson Lianne Dalziel and quite probably Damien O’Connor all voting for this huge impost upon South Island ratepayers. 
Hon Member 
: How much? 
GERRY BROWNLEE 
: The best I can estimate is that their vote tonight will cost their constituents and mine some $70 million. [ 
Interruption 
] Clayton Cosgrove sits over there and says his constituents can afford it. The good citizens of Waimakariri can dive into their pockets and pull out $70 million and he says that it does not matter. Well it does matter because Canterbury has some of the best-quality water in the world and I will keep saying that right throughout the debate on this bill. By the end of it some Labour members may understand the point that by saying the whole country has to have the same water standard as Auckland’s some of us will get done. That is just unacceptable. 
I return for a moment to the issue I spoke of earlier in the day—telecommunications. Telecommunications is not included in the bill. This Government touts constantly the opportunities that this country will have from the knowledge wave—from the great technological advance that this country is likely to experience at some point. But this bill does not cover broadband Internet access. If we happen to live in the right part of the country we will receive whatever the provider of the service gives us and we will have no right to question the quality of that. Worse than that the people who live in some parts of the country particularly in rural New Zealand will be out of luck totally. 
STEPHEN FRANKS (ACT NZ) 
: I rise for the ACT party to address Part 1 which in clause 4 amends the Commerce Act by including in the definition of goods “gas and electricity” and “to avoid doubt the supply of electricity gas telecommunications or water” in the definition of services in that Act. I would be very interested to know the effect of putting those terms into that Act. That seems to me to be a fair question to ask of the Minister in the chair the Hon Judith Tizard. The Minister has a whole raft of officials who have been patiently waiting with very little prospect of being required to give advice throughout this debate. Given that Labour is classically and typically uninterested in the welfare of workers it does not mind wasting the officials’ time. It knows that they do not have to be paid. They are on a salary and probably do not get either overtime or holidays in lieu so the Government is therefore quite happy to have them sitting here doing nothing while the Minister does not ever bother to answer questions or to participate in this debate. 
Hon Judith Tizard 
: I have. 
STEPHEN FRANKS 
: Not in this debate. 
In this debate a series of questions has been asked about just how it can be described as protection to add into the various Acts provisions that will require one-size-fits-all liability for standardised services where there are standard form contracts already in use and where usually if there is a failure the loss will simply be spread back across the community. How can that advantage the community? 
Mr Catchpole mentioned for example the power outages in Auckland. If the bill had been in force and it had been held that there was a breach of one of the warranties or that in some way liability should flow from the failures he mentioned in Auckland what would have happened? That is very instructive. The Minister should consider that and explain to us just how the position would have differed if this part of the bill had been in force during the failure of supply in the electricity industry in Auckland 5 years ago. That would probably help everyone in this Chamber to understand better why we are ramming this bill through under urgency. After all it was introduced in 2001 referred to the Commerce Committee in October 2001 sat with nothing being done about it right through the election in June-July 2002 and has finally come back to this Parliament to be shoved through under urgency by a Minister who does not think that it needs to be explained to anyone—not to this House and not to New Zealanders. 
All that the Government thinks it needs to do is to put a slogan in the title of the bill and then to go ahead with steps that were taken or were avoided for very good reason when the Commerce Act the Fair Trading Act and the Consumer Guarantees Act were drafted. The amendment of those three Acts by the insertion of these services most of which are still publicly owned does nothing except to give an opportunity to shift loss usually from those who can best afford to bear it to those who cannot. If the insertion of these clauses into the Commerce Act is intended to mean there will be new remedies that are not presently available for anti-competitive conduct surely someone at some stage could have explained that. Nothing in the select committee’s commentary on the bill even attempts to explain why these provisions are to amend the Commerce Act. The Minister has had officials sitting there all evening who could easily have been called upon to advise—it may be that only a few words from the Minister could explain to the Committee what this bill is about. But certainly from my knowledge of the Commerce Act—which at this distance is not as fresh as it once was but I suspect I certainly have more familiarity with that Act than most members do—I cannot fathom any advantage that Part 2 gives to anyone. I certainly cannot work out from the commentary of the select committee what advantage it gives to anyone. 
Brent Catchpole 
: Part 1. 
STEPHEN FRANKS 
: I thank the member. I could probably say the same thing when we get to Part 2; it will be just as true. 
But certainly it does absolutely baffle me as to just what Part 1 will achieve other than adding to the advantage of a political slogan that makes it possible for the Government to say it has amended X number of Acts and has added consumer protection Y number of times. The Minister in the chair may well have an easy answer. It may be that I have overlooked something that I should have known. But certainly after coming to this bill without having sat on the committee it is completely baffling as to what will be achieved by sticking these provisions into the Commerce Act. 
I also say that the drafting is a little bit of a puzzle. 
STEVE CHADWICK (NZ Labour—Rotorua) 
: I move  
That the question be now put 
. 
Hon GEORGINA TE HEUHEU (NZ National) 
: Two of my colleagues have already signalled that I will seek leave to table some papers so I shall do that at the beginning of my contribution. First I seek leave to table a report from the  
Southland Times 
 of 30 October 2002 headed “Water standards low” part of which refers to a report that the cost of upgrading all the water supplies in this country has been estimated at about $750 million. The second one is an extract of figures from the Rotorua area that refer to— 
Documents by leave laid on the Table of the House. 
Clause 4 “Interpretation” is where a lot of the trouble starts. For the first time water is included as a good. As I said that is where local authorities see enormous difficulties for themselves and that is exactly where the National Opposition sees negative spin-offs to consumers right across the country. Clause 4(1)(b)(vi) states: “to avoid doubt water and computer software”. So they are included and one knows straight away that that provision is to be regarded with some suspicion. Actually no suspicion is required because it signals immediately to water suppliers just exactly what they are in for. 
The Southland District Council’s group asset manager one Dave Adamson said that the proposed legislation makes the current guidelines become standards thereby putting an onus on the council to take all reasonable steps to supply wholesome water and all practicable steps to comply with the guidelines. That implies a duty to undertake risk management plans of course—because that is what it does—and liability for relative penalties should anyone get sick or die as a result of drinking contaminated water. It is clear that countrywide the water standards are low. That is why we proposed to have the commencement date of this legislation put out to 2006—to give councils a reasonable time to get themselves organised for it. But that is not to be because this Government is doing what it is good at under urgency which is bringing in legislation for which nobody is really prepared and for which the overall impacts are not at all clear. 
The Southland District Council had planned to have all 13 of its water schemes upgraded by 2009 at an estimated cost of more than $2 million. Two have been done but the council’s guess is that this legislation will probably require the completion of all 13 schemes by 2006 or 2007. That is a very tight time frame. As I say the council had estimated it could do that work by 2009. So clearly this legislation will result in huge quite substantial additional costs. Who will carry that cost? The consumers will carry it. That is what this issue all boils down to. As I say the local authorities have not even estimated what some of their schemes will cost to upgrade. That is a problem. 
As I said earlier and as the paper that I have tabled shows the situation in Rotorua is not good. It is not a wealthy area by any means. A number of suburbs register very low on the scale of water quality—at grade D. That standard is deemed to be low quality. So somebody has to pay for that. 
Sandra Goudie 
: Grade E is the lowest. 
Hon GEORGINA TE HEUHEU 
: I am informed by my colleague Sandra Goudie that grade E is the lowest. So grade D is almost up there. Somebody has to pay for this work and we know who that will be: the poor old consumer. The bill does not give protection to consumers at all. It will lead to increased compliance costs for electricity and gas suppliers. Once again the consumer will pay. To include water in this way when we all know that water standards across the nation are relatively low is not fair. It is not right and it does not give councils time to upgrade their schemes. 
DAVID PARKER (NZ Labour—Otago) 
: I move  
That the question be now put 
. 
Hon Dr NICK SMITH (NZ National—Nelson) 
:  
I find it extraordinary that as we debate Part 1 extending the Consumer Guarantees Act to new services this is occurring on the same day that the Government is passing a law stating that anything that a group of officials within the Immigration Service do that was wrong erroneous or mistaken is now to be all OK but when that situation applies to somebody else the Government wants to have a different set of rules. I simply ask the Government this evening to show some consistency. It seems to me that it is highly duplicitous to say on the one hand that a council when providing water services has to meet these additional burdens about quality and all those things and on the other hand when it comes to a service that is provided by the Government itself like immigration to say it does not want that to come into the consumer protection and other areas covered by this bill. Not on your life! This is an example of the double standards that we see over and over again from this Government. 
That is also interesting to me because I sat on the Local Government and Environment Committee when it dealt with the new local government legislation around water supplies. We were told water was an essential service and we should not have any damn private enterprise providing water in New Zealand. It was only late last year that we passed ridiculous laws to restrict the private sector from being able to participate in the provision of water services even in rural communities. I think we showed at the time that half a million New Zealanders receive such water supplies. But the Government’s ideological view was that water was a public service that could only be provided by councils and must be governed under the Local Government Act. Then we come to this bill and notably to Part 1 where it shows the Government has changed its mind. Water is to be just another tradable service. I tell the Minister in the chair the Hon Judith Tizard that she should get her head clear. Either it is one thing or the other. Water supply is either a monopoly service to be provided through democratically elected local councils or it is a service to be traded. It seems to me that in this part we have a serious contradiction with the very provisions that were argued with such passion but with such ideological stupidity by Labour as recently as late last year. 
I also want to know just how much this legislation will cost. My colleagues Georgina te Heuheu and Tony Ryall have been asking questions about the cost—the bill—for this. We have not heard an answer on that. 
Hon Tony Ryall 
: It could be up to $750 million. 
Hon Dr NICK SMITH 
: My colleague Tony Ryall tells me that the cost New Zealand – wide of this provision is $750 million. 
Hon Judith Tizard 
: He just made it up. 
Hon Tony Ryall 
: Don’t say that. A report was tabled. 
Hon Dr NICK SMITH 
: The member says that. What does the Minister think the cost is? Can the Minister answer the question of what the cost of Part 1 will be for the water supplies around New Zealand? 
Hon Tony Ryall 
: It’s been reported at $750 million. 
Hon Dr NICK SMITH 
: My colleague Tony Ryall without any of the resources that the Minister has and without the hundreds of bureaucrats— 
Hon Tony Ryall 
: Just the Parliamentary Library. 
Hon Dr NICK SMITH 
: He has had the Parliamentary Library find out that the figure is $750 million. If the Minister wants to say that figure is not correct we are prepared to consider and contest it. What is her figure? The silence is deafening; the Minister has no idea! She is proposing that this Parliament passes laws that will impose significant costs on New Zealanders without having any idea even faintly of what it will cost them. 
I say to the Minister that is not good enough. Where is the cost compliance report? When will New Zealanders find out the cost—the bill—for this part? I ask the Minister to perhaps seek some advice from the officials who are kindly in the Chamber this evening and to ask that question of them. Or is she another one of those arrogant Labour Ministers who come down to this Chamber and do not think they have to answer the real questions to which New Zealanders deserve answers? 
Hon Tony Ryall 
: She’s a mini-Minister. 
Hon Dr NICK SMITH 
: I am told she is a mini-Minister. I am prepared to give her the benefit of the doubt and to listen to the answer to that question. I say the public of New Zealand deserves to know just what costs this Minister is imposing on them. 
Hon RICK BARKER (Minister for Courts) 
: I move  
That the question be now put 
. 
SANDRA GOUDIE (NZ National—Coromandel) 
: I greatly appreciate the opportunity to be able to speak to Part 1 because I too have some further concerns to raise about local government. I acknowledge the fine contribution made by the Hon Nick Smith. He raised a really important point about this bill treating water as a tradable commodity. I understood that this Government did not seek to do that with water supplied by local authorities; that it wanted the ownership to remain with local authorities for communities. But I do not see that intention being signalled in the tenor of this bill. 
In Part 1 we see water described as a good. Local government is concerned about water being identified as a good particularly with regard to sections 6 and 7 of the Consumer Guarantees Act and the guarantees that are to be provided in relation to goods. Local Government New Zealand outlined in particular the guarantees dealing with goods—for instance those relating to titles descriptions and samples. I guess local government could give the worst water samples in the world yet its water would be considered safe. As for guarantees as to repairs and spare parts I do not know where spare parts enter into it and clearly Local Government New Zealand did not know that either. It was concerned that water that was identified as a good was not excluded from those guarantees identified in sections 6 and 7. Perhaps the Minister in the chair would like to take a call to explain why there was no identification of how water was going to be addressed with regard to those guarantees or indeed why water could not have been excluded from those guarantees. Of course we have no idea of what is specifically meant by “water” itself and there is no splitting out of what is provided in terms of an urban water supply and a rural water supply. 
In considering these guarantees we do have a concern about them. For example we have a concern about the guarantee as to acceptable quality and ask whether water will comply with that guarantee if it complies with the yet-to-be-promulgated drinking water standards that it is intended will raise the threshold. 
 The standards are meant to detail how to assess the quality and safety of drinking water and thereby reduce the risk. The standards are also intended to define drinking water that is intended to be for human consumption. However there was a court case in which the court observed that those with special needs for water of greater purity than that required by the wider community—of course we are talking about an agreement entered into by the wider community and the local authority and that is decided by a majority not by an individual consumer—can actually put in their own facilities to purify the water to a greater degree. Here we have water being identified as a good and subject to those guarantees under the consumer guarantees legislation. 
Similarly will the guarantee of fitness for a particular purpose be appropriate? We query what the particular purpose would be when water is actually used for many purposes such as drinking home appliances gardening washing the car and washing the boat. Some recognition needs to be given to the effect of the guarantees with regard to water. 
In cases where there is a failure to comply with a guarantee the consumer’s right of redress is to refuse to pay more than a reasonable price. I referred to that before. The Minister did not respond to the challenge that she actually answer which provision would prevail: the ratings legislation or the Consumer Guarantees Act. So I challenge the Minister to take a call to give us some indication as to where local government actually stands and which legislative provisions are actually going to prevail because there definitely is some confusion. 
DARREN HUGHES (NZ Labour—Otaki) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
Labour 52; Green Party 9; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 4(1) be agreed to: 
to omit paragraph (b)(iv) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 4(1) be agreed to: 
to omit paragraph (b)(vi) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 4(2) be agreed to: 
to omit subparagraph (iv) of section 2(1)(a). 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 82 
Labour 52; New Zealand First 13; Green Party 9; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 1 agreed to. 
Part 2 Consumer Guarantees Act 1993 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition is opposed to the extension of the Consumer Guarantees Act to water gas and electricity. I shall refresh members’ minds about what guarantees will be provided in respect of water for example. There will be a guarantee as to title a guarantee of acceptable quality a guarantee that reasonable skill and care are employed a guarantee of fitness for purpose a guarantee that the goods comply with their description a guarantee that the goods “comply with sample” a guarantee as to price and—wait for it—a guarantee as to repairs and spare parts! Those are some of the guarantees that under this part will apply to water. 
One of the provisions in the bill that is of concern is paragraph (b)(vii) of section 2(1) in clause 6(1). That paragraph states that to avoid doubt water and computer software are going to be considered goods. So there is obviously some precedent that says that water comes under the Consumer Guarantees Act. I looked for the precedent and I discovered a document dated 30 September 2002 that explains why the Government says that water already comes under the Consumer Guarantees Act and that its inclusion in the bill is only to avoid doubt. It is because of the case of  
Hamilton 
 v  
Papakura District Council 
 in 2000 where the plaintiff’s claim that water was not of merchantable quality failed under the Act. 
Although there has not been a court decision as to whether water is a good under the Consumer Guarantees Act officials consider that it is very likely that water is currently a good under the Act. Officials have decided that water is covered by the original Act. Some official called Mr Bowie the Ministry of Consumer Affairs’ Chief Advisor Policy Projects has decided that. That is an august position to decide that water is covered by the original Consumer Guarantees Act! It is completely wrong that based on an opinion from some public servant a bill has come to this House that states to avoid doubt that water is covered by the Consumer Guarantees Act. 
Because the Government takes the advice of Mr Robert D Bowie the ministry’s chief adviser on policy projects as seminal I ask the Minister to look at another memo written by that public servant on 8 October 2002. The Government is prepared to take his advice in one memo but not his advice in the next memo. In the next memo this commentator on the law said: “The only remedy available to a consumer under the Consumer Guarantees Act that water is not of an acceptable quality is to sue for damages for the breach of the Act. However the practical effect” —according to Mr Bowie—“of a successful claim by a consumer under the Act may be if the fault is one that has a general application that a council feels compelled to upgrade its water in order to avoid future claims by other consumers.” So the Government’s official adviser on whose advice it is prepared to base legislative drafting propositions is telling it that people will be able to sue the councils. 
And what happens if a council that is supplying water is told that its water is of unmerchantable quality and that it is liable to be fined? What does the council do? Well the advice goes further: “Yes a council could decide not to supply.” Rotorua’s eastern suburbs’ water supply is rated D and is not up to merchantable or acceptable quality. What will happen? The Government is saying that no the councils are not going to spend a fortune upgrading water supplies. The officials say that they do not need to do that that they can just turn the water off. Well that is not going to happen. 
That is why we are making the point that to have the Consumer Guarantees Act apply to water is wrong. As I said in that Act there is a guarantee about spare parts and there is a guarantee about durability. We are saying that applying those guarantees to water is ridiculous unnecessary and costly. I have asked the Parliamentary Library to find out how much is being spent to upgrade water quality. 
JOHN CARTER (NZ National—Northland) 
: I am sorry; I should have allowed my colleague Tony Ryall to continue. I want to make a contribution on Part 2 because I am concerned about some parts of it. The Hon Tony Ryall has made a number of points and has given me a number of papers about the issue of water supply; I am sure he will want to come back and comment about those parts but I want to talk about the issue of telecommunications signals. 
Darren Hughes 
: They are included. 
JOHN CARTER 
: No they are excluded. That is the fascinating part. I ask the Minister of Consumer Affairs why they are excluded. I find it quite remarkable. The bill includes computer software as a good and the definition of “services” in section 2(1) in clause 6 includes telecommunications. It talks about “a contract for or in relation to the supply of electricity gas and telecommunications”. But telecommunications signals are not included as a good. I find that fascinating. Perhaps the Minister will take a call to give an explanation as to why the signals are not included. I cannot understand that. 
Darren Hughes 
: It’s in the select committee report. 
JOHN CARTER 
: It is mentioned in the commentary? Well it fascinates me. 
Stephen Franks 
: They cannot guarantee the quality of the porn sites. They dropped signals because they can’t guarantee they can live up to it. 
JOHN CARTER 
: That is the problem is it not? I thought this bill was about consumer protection and about guarantees. If the Government is saying that we have to legislate to guarantee supplies then why does it pick out the easy bits and not the tough bits? I assume that the need for the consumer to be protected is the principle behind the bill. I do not necessarily agree with that; I think that far too often now in this Parliament in this country we pass unnecessary legislation. 
Let me digress for a minute. Here we are talking about water supplies. I would like someone to stand up and tell me how many people over the last year 2 years or 10 years have died because of contaminated water. I do not know of any; I have not heard of any but there may have been one. We are going to have up to $750 million of ratepayers’ money spent on protecting people against something that they do not need to be protected against because it has not happened! Well that is part of what is happening in this country. We are so hell-bent on passing legislation to protect everybody from anything that we will end up putting people in cotton wool. 
I go back to the issue of telecommunications signals. Because it is too hard because the Government cannot guarantee the quality of them it is leaving them out of the bill. What sort of consistency is that? If that is what is actually happening if that is the reason behind excluding them what in the world are we talking about? If we are saying that electricity companies have to guarantee a consistent supply and that water companies have to guarantee not just a supply of water but a supply of water of a certain quality and standard why are we not saying that telecommunications suppliers have to supply signals? In this world today we survive on telecommunications signals. We are saying that if a telecommunications signal affects an aeroplane that is trying to land and it fails to land that is all right; it does not matter if 300 people on board are killed because the Government is not able to protect them. But for everything else it is easy to provide guarantees. There might be some cost to it; it might cost $750 million of ratepayers’ money. But that is all right; that is OK. We can do that but we will not try to do the hard stuff. 
Well I say to the Government that that is not good enough if it is going to legislate. I say to it seriously that it should not legislate because we in this country are so legislated for now that it is crazy. When we become the Government after the next election the whole lot of this garbage will go. If I have my way the Human Rights Commission the Privacy Act and the whole damn lot will go in the bucket. However I do not think we will go as far as that. 
Hon Judith Tizard 
: Excuse me have you forgotten who brought in the Privacy Act? 
JOHN CARTER 
: Yes I would chuck the whole bloody lot out! Most of the country would not even notice quite honestly—but that is just me. 
I seriously say to the Minister that if she is going to legislate then she should do it properly. She should not sit there and not even take a call and leave out the tough stuff. I want to know when I am in the middle of doing something on my computer and I am connected into telecommunications that the signal will be OK. 
BRENT CATCHPOLE (NZ First) 
: I would like to speak on Part 2 of this bill which is the consumer guarantees part of it. I have listened to a number of speakers here tonight and water quality is one of the issues that has been raised on numerous occasions. I have to sympathise with Gerry Brownlee when he spoke of Christchurch water being far superior to any other in the country and he was concerned that Christchurch might end up with water quality like that of Auckland because Auckland might be the one that dictates the quality. 
Hon Judith Tizard 
: That’s not in the bill. 
BRENT CATCHPOLE 
: Well there is nothing in this bill that actually says that Auckland has to be the benchmark. Christchurch water might be the benchmark and I would certainly be happy to have Auckland’s water quality brought up to the same quality as Christchurch water. Because after all we are having to put up with the water coming directly from the Waikato River which has gone via Kinleith and of course Hamilton and whatever Hamilton throws into it. I know they appreciate our desire to have good-quality water. 
Apart from a comment from Gerry Brownlee about being in favour of waste water I heard a number of National MPs talking against the inclusion of waste water in this bill. I am rather concerned about that and disappointed that they have overlooked a very important issue about waste water in particular in Kawakawa Bay in the Clevedon electorate where I do a lot of work. They were promised by the Mayor of Manukau City that they would have a waste-water reticulation in place by the end of this year. They have subsequently been told that that will not now happen for another 3 years. The people out there are desperate. During the winter their septic tanks overflow and during the summer they are not allowed to swim at the beaches because the waste water flows into the water at their beaches. 
If this bill will give them some respite then I am very much in favour of it. Those people are desperate to have their waste-water system put into place by Manukau City and they need it done now. If this bill will help to do that then New Zealand First will support it because the people in Kawakawa Bay desperately need that service. We should put this bill into place and make sure it provides that service for the people of Kawakawa Bay in the Clevedon electorate. 
It is important to them and it is important to other areas. Beachlands desperately tried for years and years to get its waste-water service and it was continually put off. It has it now but Kawakawa Bay is now suffering the same fate as Beachlands did. It has been put off continually. The people out there are desperate. They cannot swim at their beaches because the beaches are contaminated. If they go swimming they will be in trouble. They will become sick. 
Hon Tony Ryall 
: They’re not going to be able to go to the beach with this Government. 
BRENT CATCHPOLE 
: Of course they are not going to be able to go to the beaches. They will be taxed on it. I come back to the bill. This bill will help the people of Kawakawa Bay and the Clevedon electorate so New Zealand First will support it. 
Hon KEN SHIRLEY (Deputy Leader—ACT NZ) 
: I am certainly pleased to see the inclusion of water within the definition of goods and services which it clearly is and other Opposition speakers have made that point. I listened to the speech from the member who has resumed his seat who talked about the Clevedon area. When we look at Watercare Services in Auckland that really goes to the hub of this dispute. On the one hand we have the socialist model that water is under the control of each individual authority and on the other hand we have seen the spectacular success of Watercare Services which is supplying the bulk water as well as picking up the trade waste. 
Members may not be aware that Watercare Services harvests the water from the Hunua dams and others in the Waitakeres. It also brings water from the Waikato treats it stores it and reticulates it for under 50c a cubic metre. What do the councils of Auckland do? Manukau City Council retails it for about $1.10; Metro Water Auckland City does it for about $1.25; and out west the hub of the Labour Party where Bob Harvey is the mayor—he was the former president of the Labour Party—he retails it at $1.53. The water that Bob Harvey gets wholesale at less than 50c a cubic metre he retails out west at $1.53. 
It is meant to be the green city but it has the highest per capita usage of the five Auckland authorities. Is that not extraordinary? It is little wonder that Bob Harvey does not want anything to do with Watercare Services. In Manukau Watercare Services very sensibly is going to take over the whole kit and caboodle. It is part of the hydro cycle. The rain falls we catch it store it supply the treated water turn on the tap and then the water goes to waste. We then have to treat that waste and discharge it back to water. It is sensible that it comes under the one jurisdiction. Of course water comes within goods and services. It is absolute folly to suggest that somehow water is special. Just like any other goods or services it should be subject to the forces of supply and demand and pricing. Too often people refuse to apply proper pricing to water. 
John Key 
: You are opposing the bill. 
Hon KEN SHIRLEY 
: Not at all. 
John Key 
: Yes you are. 
Hon KEN SHIRLEY 
: No I am confining this speech to the water issue and the nonsense that we have had in Auckland City. Many of the local authorities are trying to obstruct Watercare Services. I believe that it is doing a very good job by applying pricing mechanisms to water and it will continue to do so. Bob Harvey and some of his Labour Party supporters are doing all they can to unhinge Watercare Services and disrupt that sensible supply. We certainly support that aspect of the bill but it is a very narrow aspect; I appreciate that. When we come to some of the other aspects that is when we will really start to worry. There are real concerns when we start looking at some of the other aspects. I joined this debate on the water issue and that was the key contribution I wanted to make as it relates particularly to the Auckland region. 
Hon Dr NICK SMITH (NZ National—Nelson) 
: What I find extraordinary about Part 2 is the classic Labour Party “do as we say not as we do” provisions. What we are proposing to do in this part is to put obligations on a whole number of providers of services to provide guarantees when they are not prepared to guarantee anything. Remember the old Labour Party credit card? Why do we not have the Consumer Guarantees Act stretched into the Labour Party credit card? It would be a dodgy deal. The member Ken Shirley has a copy of the credit card. 
My comment to the Minister given that she wants to extend these provisions is let us extend them to Labour Party promises. For instance there was the promise of no new taxes. How would that go? Have the cockies been told that with their flatulence tax? Have the road users been told that with the 5c increase in petrol tax? Have the 16-year-old sherry drinkers been told that? This Government is “do as we say not as we do”. I take objection to that sort of approach to government. 
Then there is the logical inconsistency. Why is it that this bill does not include telecommunications but includes water electricity and gas? I would love to know from one of the Labour members how that differentiation is made. It seems to me that a logical approach would be to say that where Parliament has designed specific legislation—as we debated for nights in the local government legislation over water or the specific electricity law or the specific gas law—then that would do the job. But this legislation was designed for specific goods. As my colleague Tony Ryall says how are we going to provide repairs and get spare parts for electricity? I do not claim to be an electrical engineer but I am not sure how we can get a spare part for an amp. It is rather tricky. When I get my kilowatt-hour and it does not arrive can I have the spare part please? What about water? Can I have a spare part for a litre of water? 
I say to the Minister that that is what she is putting into the law. That is the sort of nonsense—[ 
Interruption 
] Well it does. An official document provided by consumers’ officials states that if we put water electricity and gas under the Consumer Guarantees Act we have to be able to provide repairs and spare parts. We have to be able to provide a sample. I have to say that it will be a bit interesting— 
John Carter 
: A sample of electricity. 
Hon Dr NICK SMITH 
: A sample of electricity and we will put it in a bottle for the member! I know there have been some extraordinary developments in electrical engineering and modern physics but I do not think we have yet worked out how to bottle electricity. I know that this Minister is capable of some extraordinary things and I look forward to this technical innovation that allows us to bottle electricity! 
Then we have to have this guarantee for title. I refer to the member for Rotorua. I do not know whether members know her latest nickname. It is “Snowflake”. She melts the moment she puts the heat on. She will giggle on but I would like her to explain how one might be able to guarantee certificate of title for some gas. Perhaps that is part of this new flatulence tax that the Government is delivering for the people of New Zealand! I know that it is coming up to 10 o’clock and we have urgency for some days but the Minister needs to answer how one can have a guarantee of title for water for gas and for a number of amps. 
Darren Hughes 
: Why didn’t the National members on the select committee ask those questions? 
Hon Dr NICK SMITH 
: Well I hope the bright spark from Kapiti might tell me how we might be able to provide a guaranteed sample of electricity. 
Darren Hughes 
: Mr Brownlee never raised those questions on the select committee. 
Hon Dr NICK SMITH 
: I have to ask the member; I have a simple question for him: how do we provide a certificate of title for a kilowatt-hour or repairs and spare parts for a kilowatt-hour or for that matter water? The provision is a nonsense and the Government has not thought this through. 
STEVE CHADWICK (NZ Labour—Rotorua) 
: I move  
That the question be now put 
. 
JOHN KEY (NZ National—Helensville) 
: It is my pleasure to stand on behalf of the National Party and oppose Part 2. As members well know this bill is looking to amend three specific Acts: the Commerce Act the Consumer Guarantees Act and the Fair Trading Act. In particular I want to make reference to the Consumer Guarantees Act to clarify the position that will be confusing a great many consumers in New Zealand. It is simply that this bill attempts to define a service or a good but it uses in the definition of a good an objective test based on a reasonable person. That is what the law states. One cannot contract out of it under the Consumer Guarantees Act. It says that it is an objective test based on a reasonable consumer. 
That means that if electricity is defined as a good then a reasonable consumer is meant to understand that it will have certain imperfections and certain specific peculiarities in the way it will act. That is what the law says. So it says for instance that electricity is subject to momentary fluctuations and prone to interference by environmental factors and actions of third parties. In other words that is the kind of understanding that a consumer is meant to have. 
Well how practical or likely is it that consumers who will be looking to the Consumer Guarantees Act that will be amended by this legislation tonight will understand uniformly an objective test? Let me put this example to the Committee tonight. There I am with my pinny on in front of the stove cooking up a lovely supper for 141 of the neighbours I have invited around from the Helensville electorate for a quick dinner. I have my 15 ovens burning away and for dinner I have decided to cook a lovely meal. I am going to start with a mulligatawny soup. I will move nicely into roast legs of lamb—beautifully done with just a little pink inside. I will have potatoes pumpkins—because those are always very good for us—a few peas some gravy and bits and pieces. I am going to make a lovely dessert. I will have pavlova a New Zealand favourite. I know that the Australians have tried to claim it and that there will be Australians listening in on their satellite dishes to this speech but I want to tell them here and now that nobody in New Zealand believes that pavlova is an Australian dish. It is a New Zealand dish and we are proud to have it. 
Hon Rick Barker 
: That’s not what we’re here to talk about. 
JOHN KEY 
: That is not what we are here to talk about; we are here to talk about the objective test of whether electricity should be a good. So here I am with 141 people for dinner from the Helensville electorate and I am serving them a beautiful three-course meal. We sit down and the power goes off. The lights are out but there are plenty of people at home because they are all National Party supporters. There are 141 of them. They do not know each other very well; they do not have neon signs. All of a sudden I come out and say: “Look a bit of bad news—“ 
David Benson-Pope 
: What do you know about Epsom? 
JOHN KEY 
: I know lots about Epsom. It is a wonderful place. There is— 
David Benson-Pope 
: You live there. 
JOHN KEY 
: I do live there from time to time and it is a wonderful part of the country—absolutely wonderful. But like all good things I like to share myself around. There is absolutely no point otherwise. I am known in places in Wellington Helensville and Epsom and wherever I go I am given a sort of coming-home greeting. People are proud to have me when I am there. But that is not what I am here to talk about; I am here to talk about this dinner for 141 people—and the power has gone off. 
Here is the rub: am I a reasonable consumer with an objective test? In other words if I cannot get an electricity supply would I be reasonable to say that it is OK to understand that the electricity may not be there? Well with 141 people for dinner and a beautiful 3-course meal when I am having pavlova for dessert with kiwifruit on top— 
Hon Tony Ryall 
: The answer is to buy your own power company. 
JOHN KEY 
: The answer is to buy one’s own generator. It is cheaper than a power company. My point is that on that particular occasion electricity supply would not meet an objective and reasonable test—and that is where this legislation will horribly fail. It is just not possible to have an objective test measured across the country because people will have different circumstances at different times. People will be looking to this fine Parliament for legislation that they will be able to rely on and they will simply not be able to rely on it because they will not understand that particular issue. 
DARREN HUGHES (NZ Labour—Otaki) 
: I move  
That the question be now put 
. 
STEPHEN FRANKS (ACT NZ) 
: We are now at the heart of the stupidity in this bill that has resulted in ACT committing to vote against it. When the services that this bill puts under the Consumer Guarantees Act are compared with that Act’s provisions we see just what happens when ideology or a political manifesto gets in the way of logic. When we put water electricity or gas supply into the Consumer Guarantees Act—a pretty suspect piece of law to start with—we end up with the rich being subsidised by the poor. Essentially this means that the people who use more of those services who use lots of them can insist on a higher standard of service. They will exercise remedies the others will not have the time to exercise and will get the benefits of inventive new ways of persecuting the supplier that the poor will not think of—and they will do all of that for no particular reason. 
Let us take water as an example. Paekakariki just to the north of Wellington has something in its water that corrodes tap washers. This may seem trifling to members on the other side. They may think it is funny that tap washers and joints get corroded quite quickly by the Paekakariki water supply but quite clearly a reasonable person coming into Paekakariki from outside would not assume a tap washer was likely to disappear within 3 years. That is in fact what happens. If the taps are used frequently the time taken for the washers to corrode is less. The effect of this requirement is that the local authority or the supplier of the water is probably going to have to guarantee that it will meet the cost of those tap washers. Who does that take money from? It takes it from the people. People make a claim and they get paid for their tap washer or the supplier upgrades the water supply to make sure it does not corrode tap washers and everyone has to pay extra. The people who pay the price of that in their water supply will be paying much more to those who have lots of taps than to those who have only a few taps. They will probably end up paying for tap washers they would never dream of using. Those who can afford to put a water softener on or to take a precaution with their tap washers will be paid for by those who cannot afford to take such precautions. 
We can see the same thing with electricity. The person who can afford to take a precaution against losing the contents of their deep freeze because there is an outage or a power unreliability will be paid for by those who do not even have deep freezes. It will be paid for in the price of electricity to those who cannot afford to take any sort of precaution. Householders who decide that an interrupted supply or a power spike in their computer is really irritating and who decide to go and harass the local power supplier because of what the spike did to their computer are going to be subsidised by people who do not even have a computer. The cost will be borne by the people who are busy using candles and hot water bottles so that they do not use up power the local authority has asked them to save. The sort of madness we had with the major industrial suppliers deciding to go uncovered on spot prices will presumably come under the Commerce Act or under one of the other parts of this bill so I will not in this part go into the subsidisation of big business that is occurring. But I will say that the prospect of business for lawyers or the prospect of the business the disputes tribunal will have is just rife in this bill. 
Let us look at some of the guarantees. Let us take water. There is a guarantee that the water is durable—durable for what purpose? There is a guarantee that it is safe if it is used in a manner that a reasonable consumer would expect to use to obtain the goods. What about when one’s swimming pool is too deep for the kids? Does the local authority have to worry about that? The local authority can of course draw attention to the defects so we will see another set of these ludicrous warnings with which New Zealand is now infested saying that if we use too much of something it might make us feel bloated. 
Hon RICK BARKER (Minister for Courts) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
Labour 52; Green Party 8; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 6(1) be agreed to: 
to omit paragraph (b)(v) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 81 
Labour 52; New Zealand First 13; Green Party 8; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 6(1) be agreed to: 
to omit paragraph (b)(vii) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 81 
Labour 52; New Zealand First 13; Green Party 8; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 6(1) be agreed to: 
to omit paragraph (b)(vi) of section 2(1) from the definition of  
services 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 81 
Labour 52; New Zealand First 13; Green Party 8; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 81 
Labour 52; New Zealand First 13; Green Party 8; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 2 agreed to. 
Part 3 Fair Trading Act 1986 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition will be strongly opposing Part 3. It deals with the Fair Trading Act an amendment to which we debated in Committee prior to going into Committee on this bill. Part 3 of the Consumer Protection (Definitions of Goods and Services) Bill proposes to include gas electricity water and computer software as goods for the purposes of the Fair Trading Act. 
Just as my colleague the Hon Dr Smith was able to ridicule the inclusion of gas water and electricity in the Consumer Guarantees Act through reference to the fact that there would be guarantees of “spare parts” for water and “title” for water and electricity similarly we should raise concerns about what is being proposed in this bill. This bill proposes that the provisions of the Fair Trading Act which refer to the safety of goods simply cannot be sustained in respect of electricity and gas. Electricity and gas are inherently unsafe substances or matters and it is only through an appropriate use of the equipment delivering electricity or gas that these goods can be rendered safe. So for the Fair Trading Act to have to cover gas and electricity and the requirement therein relating to level of safety is quite ridiculous. I agree with the concerns raised with the select committee by the New Zealand Law Society with regard to this. The society raised concerns only in respect of electricity but I think it is just as relevant to gas. 
What is foolish about this bill also is the requirement relating to the quality of supply etc. We simply cannot provide the perfect electricity or the perfect gas on a continuous basis. With continuous supply as one would understand there are no interruptions and no difficulties with the voltage. But the fact is that these will be issues with electricity from time to time and to have any guarantees or warranties provided is foolish. 
 The National Party in Opposition also says to the Government that the Government does not know the cost of what it is proposing to do because this bill was presented to Parliament without a regulatory impact statement or a compliance cost statement both of which are required under Cabinet guidelines and neither of which was provided to the Commerce Committee. We raised the matter of costs on business and consumers as legitimate issues because we have been able to reveal to the Committee tonight that Local Government New Zealand says that councils are planning to spend $400 million over the next 5 years to get water quality up to a standard that is acceptable to be covered by the Consumer Guarantees Act. Earlier today we tabled a report that shows that it would cost $750 million for all councils to upgrade their water supplies. The point is that the Government did not even know. The Minister told us to prove the figures and we tabled them. The Minister did not even know. 
The previous bill the Fair Trading Amendment Bill (No 3) sat around in the select committee for years and took less than an hour of consideration. This bill which did not take much longer for consideration sat on the agenda for months and months and months. It is now being passed under urgency and the Minister in the chair Judith Tizard cannot even tell us the cost to consumers of those decisions. I alert the Labour members opposite. They should understand that the Hastings City Council is putting $16 million aside to upgrade its water. Palmerston North is putting aside a similar amount and consumers will pay for all of that. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: I am a little surprised that the member is saying that Opposition members have tabled information about the figures quoted in the Chamber because having looked at the two documents I cannot see any reference to the figure they mention. However I do have information from the officials that the $400 million mentioned is the cost over time to all local authorities to provide infrastructure to meet the proposed Health (Drinking Water) Amendment Bill over the 5-year lead-in period. So the cost of this legislation could be nothing—because it could be that local authorities are all moving towards their legal responsibility to provide residents with good quality water—or it could be quite large. But we cannot say because this is about trying to make sure that the responsibility for the standard and service provision falls where it is most sensible for it to fall—with the authority with the organisation or with the trader who can actually made a difference to the quality and can make sure that the quality of the service or good is of an appropriate standard. 
Anyone can make any legislation sound mad if one chooses to read it in a completely disjointed way as though members know no more about amendment bills than to read them entirely separately from the substantive Act. The Commerce Committee has looked at this legislation in a great deal of detail. Its members have had excellent advice from the very good public servants who provide it with support the submissions have been heard and we need to get on with this legislation. As many Opposition members have noticed it has been sitting around for a while. It is a wonderful opportunity to give better protection to consumers. 
STEPHEN FRANKS (ACT NZ) 
: I am sorry that I did not speak earlier although it would have been out of turn because we have had the benefit of one of the rare contributions from the Minister in the chair Judith Tizard and she might have been able to enlighten me as to exactly what is intended by Part 3. It seems to me that it might be one of the only parts of the bill I could favour. Part 3 of the Consumer Protection (Definitions of Goods and Services) Bill merely adds a reference to “personal property of every kind (whether tangible or intangible);” plus an avoidance of doubt provision about water and computer software to the Fair Trading Act. I am not quite sure exactly what mischief is intended to be dealt with by the reference to “personal property of every kind (whether tangible or intangible);”. Previously the definition of “goods” drew on the very long-tested usage of that term in the Sale of Goods Act. This bill amends section 2(1) of the Fair Trading Act by repealing the definition of the term “goods” and specifically including under paragraph (b) of the new definition: “(i) ships aircraft and vehicles: (ii) animals including fish: (iii) minerals trees and crops whether on under or attached to land or not:” I have to assume that each one of those additions represented some case that cast doubt on whether they would have otherwise been included in the definition of “goods”. But to then include paragraph (a) which just about covers everything that is movable and transferable: “personal property of every kind (whether tangible or intangible);”— 
Sandra Goudie 
: Intangible? Wahi tapu? 
STEPHEN FRANKS 
: It could include intellectual property. The definition includes: “(vi) to avoid doubt ... computer software”. Plainly they are intending to capture some forms of intellectual property but what is not clear is just what it is intended to act on and what the mischief is. I do not recall having seen that in the first reading copy of this bill either. The Minister still retains her three officials and she has made only two relatively mundane or straightforward contributions during the whole evening. I think it would be helpful to the Committee if she were to explain just why Part 3 is in the bill and what it adds to the Fair Trading Act. I have gone through to try to work out what we are getting by putting in the words: “personal property of every kind (whether tangible or intangible);”. There is case law that already states that shares are goods for the purposes of that Act so that “choses in action” are specifically dealt with in an earlier part of that Act. They were specifically excluded from the Consumer Guarantees Act for good sound reason but here it is obvious that they are expected to stay in. I really am at a loss to understand it. I am sure there is a simple reason but by including intangibles it does make it very hard to see how some of the assurances of the Fair Trading Act would apply. 
I take the simple example of the prohibition on being misleading or deceptive. It is very very hard not to be misleading by the test under this Act when one is selling something as complicated and as puzzling to most people as computer software. The test of course is not the reasonably expert user. The test under this Act at least for some purposes is actually a kind of fool. The Fair Trading Act does not require that it be deliberately misleading. It is quite sufficient for found liability that it be innocently misleading or unintentionally misleading. How then will a software manufacturer avoid misleading for the purposes of the Fair Trading Act when we who have had much to do with the industry know that it is almost impossible for the promise that they seem to hold out ever to be fulfilled? How many Government information technology contracts have ever been delivered in accordance with the representations made by the software manufacturer? In those circumstances a sort of disappointed common sense usually prevails and the purchaser realises that was what was to be expected. 
SANDRA GOUDIE (NZ National—Coromandel) 
: In looking at Part 3 I would like to refer to the intention of the Fair Trading Act which is to prohibit certain conduct and practices in trade to provide for the disclosure of consumer information relating to the supply of goods and services and to promote product safety and so on and so forth. It is largely related to the contractual arrangements that are entered into. 
Section 9 of the current Fair Trading Act sets out the basic concepts that underpin the Act and it states: “No person shall in trade engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” The Act specifically intends to apply to local authorities in the general provision of goods and services in trade. The bill in clause 11 proposes to amend the Fair Trading Act by substituting a new definition of “goods” and by inserting a new subparagraph into the definition of “services” so that it will include water and the removal of waste water. Under paragraph (a) in subclause (1) goods are defined as “personal property of every kind (whether tangible or intangible);” and I really wonder what the term “intangible” actually means because that is a pretty broad term to be used in legislation. One could start considering things like wahi tapu religious connotations and matters of that sort as the word “intangible” certainly covers that type of subject matter. Clause 11 also inserts subparagraph (vi): “to avoid doubt water and computer software”. 
The questions that are raised with regard to the definition of water and the proposed amendments to the Consumer Guarantees Act are applicable here and we refer members back to those comments. Section 2(1) of the Fair Trading Act will be amended by the addition of new subparagraph (iv) to paragraph (a) in the definition of services. Although the supply of water and waste-water services may be contained in the general definition of “service” it is curious that water and waste-water services have been specifically included in relation to a contract. That is one of the matters that I have raised consistently as I have spoken here tonight. 
Steve Chadwick 
: Repeatedly. 
SANDRA GOUDIE 
: Absolutely because the matters around contracts are actually quite substantial. As with the Consumer Guarantees Act we note the general unsuitability of many of the enforcement provisions and remedies available under the Fair Trading Act which are set out in Part 5 of the Act. They include the granting of injunctions restraining certain conduct ordering the disclosure of information or the publishing of correcting statements declaring that a contract is void varying a contract the refund or return of property damages repair and supply of specified services. In that regard I refer members back to section 31 of the Consumer Guarantees Act “Guarantee as to price”. I will read out subsection (1) because I think it is very important for local authorities. Subsection (1) states: “Subject to section 41 of this Act where services are supplied to a consumer there is a guarantee that the consumer is not liable to pay to the supplier more than a reasonable price for the service in any case where the price for the service is not—(a) Determined by the contract;” There is no direct contract between a local authority and consumers. Also one has to remember that if they do not deem the price to be reasonable they can refuse to pay or pay what they consider to be reasonable. When we start having the majority of local authorities charging something like $1.10 to $1.53 as in the case of Waitakere—and I would suggest that $1.53 is a hugely exorbitant price to be paying for a cubic metre of water—and when Watercare Services is charging something like 55c for a cubic metre of water what is a consumer going to say to a local authority about what is reasonable? Consumers who are getting water supplied by a local authority will be saying: “Hang on a minute.” 
NANAIA MAHUTA (NZ Labour—Tainui) 
: I move  
That the question be now put 
. 
JOHN KEY (NZ National—Helensville) 
: I rise on behalf of the National Party to address the bill’s definition of goods and services— 
David Benson-Pope 
: The National Party is in Opposition. 
JOHN KEY 
: The National Party is in Opposition at this point but that is OK. I rise on behalf of the National Party in whatever position one wants to put it to discuss this bill’s definition of goods and services—particularly Part 3 which relates to the Fair Trading Act. Students of the Fair Trading Act will know that it deals with representations made about particular goods and services as defined by the Act. In particular it looks at different definitions but it includes product safety and it deals with false representations made about a particular product. Members will know that if this legislation is passed into law it will add to the definition of goods and services as interpreted by the Fair Trading Act gas electricity water and computer software. 
I want to spend a moment talking about computer software because not many members have discussed that tonight. As we look at computer software in relation to the Fair Trading Act let us think about product safety. What aspects of product safety do members think a consumer would be looking for under the new definition of computer software? For instance if a consumer buys a software package puts that into his or her hard drive runs a system for Internet-based trading and loses money or if that package does not give the consumer the best and most information available would he or she have a claim under the Fair Trading Act? That is the international trend in financial services—people are buying financial services online through computer software packages. They are buying stocks shares bonds unit trusts and funds. They are investing worldwide with computer software packages that will now be covered under the Fair Trading Act and they will be relying on its definition. I simply put it to the Committee that that will create a great deal of ambiguity because they will be looking through to the test of reasonableness. 
Secondly I want to look at what might lead to an action of false representation under the Fair Trading Act in respect of gas and electricity. Let us take water as a good example. As water is supplied out of the consumer’s tap it may fit nicely within a reasonable definition of good usable water. It may be drinkable fine for the swimming pool or watering the garden and it might fit all the general criteria but if a consumer uses that water to irrigate high-quality tomatoes and those tomatoes do not come up to the quality standards would that be a false representation under the definition provided in the Fair Trading Act? 
John Carter 
: It would. 
JOHN KEY 
: It would. 
Dr Wayne Mapp 
: There would be only one standard. 
JOHN KEY 
: That is exactly the point—there would be only one standard of definition. So what might be deemed to be reasonable for one consumer might not be deemed to be reasonable for another consumer. My personal opinion is that there will be a great deal of litigation over the definitions of gas and electricity. Who will bear that litigation? I can see councils being brought into such litigation. 
John Carter 
: Who pays for that? 
JOHN KEY 
: Consumers pay that through their rates. 
John Carter 
: So they will pay themselves? 
JOHN KEY 
: They will be charging themselves. Thirdly I want to look at safety as it relates to electricity. What happens in the example where the 3-year-old goes and puts his or her fingers in a socket and gets an electric shock? 
John Carter 
: The 3-year-old won’t care much about it. 
JOHN KEY 
: The 3-year-old might not care about it but the parents will. What is the issue as it relates to product safety for electricity under the Fair Trading Act? 
John Carter 
: The 3-year-old will have a stiff finger. 
JOHN KEY 
: The 3-year-old will have a very sore finger. The obligation of safety is clearly covered under the Fair Trading Act. 
DAVID PARKER (NZ Labour—Otago) 
: I move  
That the question be now put 
. 
JOHN CARTER (NZ National—Northland) 
: I want to carry on with the issue of litigation. When we look at Part 3 in relation to the Fair Trading Act and the part where it brings in the Consumer Guarantees Act there are a number of things that that Act supposedly guarantees. There are for example “Guarantees as to title”. The other day a constituent up in Northland brought me a case in which somehow or other a title had someone else’s name on it. My constituent does not know how it happened the council does not know and the deeds people do not know but it happened. What happens if something is wrong? Who will guarantee that but more important who pays? 
Guarantees of acceptable quality reasonable care and skilled employment? That is a good so yes there is a guarantee under the Act. Is it a service? Yes it is guaranteed under the Act but what happens if that service is not provided? Who pays? More important who pays if there is a dispute and there will be disputes because of these sorts of definitions? Perhaps the Minister in the chair the Hon Mark Burton who will be absolutely familiar with this bill will want to take a call to explain these very searching questions. There is also the issue of litigation to see whether there is a dispute. Who pays? That is the issue. The real worry with this legislation is the cost that this Government is putting on to consumers—the people it thinks it is protecting. The Government will end up causing the people of this nation huge cost. 
“Guarantees as to fitness for particular purpose”—what does that mean? Apparently it covers a good and a service. That is fine but how will the Government guarantee fitness for purpose? What if it does not comply? Who pays? If we go back to the supply authority or the local authority and they are found not to have come up to the mark and are fined who pays? It is the consumer who pays. The same people end up paying again. What are we trying to achieve here? We are trying to achieve something for the benefit of the people but all we are actually doing is loading a lot of costs on to them. I say to the Government that we have to stop this silly nonsense. We have already seen where the Government has taxed taxed and taxed. It has got into the habit now and I suppose it cannot get out of it. 
Let us look at the next thing: “Guarantee that goods comply with sample”—what does that mean? Who will guarantee that this Act does what it supposedly does? I ask Damien O’Connor what will happen when someone says: “Hang on no it doesn’t.” He or she gets into a dispute goes to a lawyer and ends up in a court case. Finally the authority gets fined but who pays? Not the authority! Of course in the first place it does but Damien O’Connor pays through his rates or through his water supply charges. The same consumer that this bill is supposedly protecting ends up paying the bill. Where is the advantage in that? It is just a silly nonsense. Why would one do it? One goes round in that ever-diminishing circle until one ends up in that place that people should not be in. Maybe that is where this Government is trying to get everybody to end up. It is the old ostrich head-in-the-sand thing but in this case the position is different. Nevertheless that is a real worry. 
There is a “ Guarantee as to price” in the Act so apparently the goods or service we get are meant to be a particular price. [ 
Interruption 
] It might be a reasonable price as well but that is another issue. But then we find that there is a dispute and here we go again—into litigation. There is an argument the authority says something is the case and no it is not. The authority goes to court loses and gets fined and the same people pay. 
What really worries me is the principle here. Why are we litigating to put people into cotton wool? There is a real world out there and people have to live and survive in it. We are constantly trying to stop people getting on with their lives. This is just another example of a Government that somehow or other thinks that people cannot stand up for themselves. I say to this Government and to the people who may be listening at home on their crystal sets that they should ask themselves this question: at the end of the day what do we actually get out of this bill? It is not a lot. 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
Labour 52; Green Party 8; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 11 be agreed to: 
to omit paragraph (b)(iv) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 80 
Labour 52; New Zealand First 13; Green Party 7; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 11 be agreed to: 
to omit paragraph (b)(vi) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 35 
New Zealand National 27; ACT New Zealand 8. 
Noes 80 
Labour 52; New Zealand First 13; Green Party 7; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 3 be agreed to. 
Ayes 80 
Labour 52; New Zealand First 13; Green Party 7; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 3 agreed to. 
Part 4 Sale of Goods Act 1908 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: The National Party in Opposition is opposed to these amendments to the Sale of Goods Act. The principal amendment—other than the replacement of the word “things” with the word “choses”—is the addition of the words “to avoid doubt computer software” by which the Government seeks to say that computer software is a good for the purposes of the Sale of Goods Act. I think we will come across the same problem that we have identified with the other changes to legislation when trying to apply the characteristics of tangible goods to intangible items such as computer software electricity gas and telecommunications. 
I want to alert the Minister in the chair Judith Tizard to the fact that I think the Government is making a major blunder in incorporating computer software as a good under the Sale of Goods Act. The reason is that although computer software is often sold with tangible items that are goods—such as instruction books and CDs from which the programme can be transferred to one’s own computer—when it comes to software a licence is usually purchased; the software itself is not purchased. No one buys Windows 2000; one buys a licence to use it. As such it should properly be described as the grant of a licence rather than the sale of a good or a service. 
There is the potential for confusion here because it boils down to the property rights of the purchaser. The Sale of Goods Act makes it quite clear that one actually owns what one sells. But although we might say that buying a suite of Windows 2000 programmes is a good and therefore has to be treated as a good we are not buying Windows 2000; we are buying a licence to use Windows 2000. Even though we are passing an amendment that includes the words “computer software”—that is that a Microsoft program is a good which one should be able to “enjoy quiet possession of” under section 14 of the Sale of Goods Act—it is not actually a good in any sense because one cannot provide title to Windows 2000; one can only provide a licence to use Windows 2000. 
The reason I raise this issue is that it will cause confusion in the future. Parliament is saying that computer software is a good which means that one can give title to it but one simply cannot give title to Bill Gates’ property. One can give a licence to use Bill Gates’ property but that is not a good. Even though Parliament decides that it is a good it will still not be a good and that will lead to considerable confusion in respect of the rights of those who own the Windows 2000 program and those who have a right to use the licence. 
I have legal advice that suggests that the best way to cater for this problem is to use the warranties and representations provided by the Fair Trading Act when something is being sold. A person just cannot own Windows 2000 unless Bill Gates sells it to him or her. What one can own is a licence to use his program so I think that the Government is creating a rod for its own back by saying that computer software is a good because it simply is not a good. 
Gerry Brownlee 
: Where does the licence come into this? 
Hon TONY RYALL 
: Well a licence is not a good; therefore even though Parliament might say it is a good it cannot be a good. Section 14 of the Sale of Goods Act implies that if someone is selling something as a good then that person has title but if one has computer software one does not have title. 
BRENT CATCHPOLE (NZ First) 
: I have been listening to Tony Ryall talking about computer software. He referred to the 1908 Act although I am sure computer software was not around then. However he is certainly right with his description. One buys only the licence to use computer software; one does not actually buy the physical property. Computer programs are intellectual property. One never has the right to own that intellectual property; one buys the licence to use it. Under the licence to use it we are not allowed to resell that individual licence on to anybody else once it has been purchased from the supplier. So it cannot be a physical good and I believe that it does not fit into this particular part of the legislation. The officials should have considered the matter when they were looking at the whole measure. I admit that we should have spotted it in the Commerce Committee. However in summary under the Sale of Goods Act computer software is not a physical good and it cannot be passed or sold on to somebody else. One does not have the right to sell it on. So how could it possibly be a good? A good is something that one physically has. 
GERRY BROWNLEE (NZ National—Ilam) 
: The previous two speakers have raised the very interesting issue of where the licence fits in. The Minister in the chair Judith Tizard can sit there and huff and puff and yawn and carry on and act as if she is completely uninterested and as if she has no care towards consumers in New Zealand but I have two questions to ask her. Is this just another attack by the Labour Government on property rights in New Zealand? 
Government Members 
: Oh! 
GERRY BROWNLEE 
: Well that is the way it looks. Or can the Minister stand up and tell us how a licence holder is protected by this bill? Much of the question that has been raised by the Hon Tony Ryall—the country’s last decent Minister of Justice—and Mr Catchpole the New Zealand First member who spoke just a few moments ago would be solved if she simply explained where a licence fits in. I think this bill got drafted in this dreadful way because the officials who are required to draft such bills have been instructed to surreptitiously attack the property rights of New Zealanders wherever the opportunity presents itself. Day after day we come into this Chamber and see the Labour Government having a go at property rights in whatever way it possibly can. 
For example how would a New Zealand firm fare that developed a piece of software and went out to sell it—a firm that does not have the same clout as Microsoft or any of the great producers of software in the world such as Oracle or some other producer; just a small software writer selling a licence to use its programme? There appears to be no protection in this bill for either the person owning it or the person who purchases the licence. I hope I see shortly the officials sneaking up to the Minister with a bit of paper to explain that I am wrong. 
Paragraph (c) in clause 13 “Interpretation” states: “to avoid doubt computer software”. It would be a good idea if the Government itself moved an amendment to add the words “and licence to use computer software”. What does the Minister think of that proposal? She simply laughs turns her head away and I think confirms that the Government has no intention of protecting the rights of the owners of computer software or any product that is sold under licence. 
The other interesting thing about this part is that the entire bill now becomes part of the principal Act the 1908 Sale of Goods Act. I have to ask a perhaps indelicate question in this Chamber: Where does that leave the now legitimised sex industry? Where are the bounds between a good and a service? 
Hon Judith Tizard 
: You’re totally obsessed. 
GERRY BROWNLEE 
: The Minister makes a rather silly comment. Last week the same Minister voted with Helen Clark for that new legislation on the basis that it was something that New Zealanders needed. We know now from the polls that they were wrong and we were right. They will not make any progress as a result of it. However if that is going to be a legitimate activity—and apparently it is since last Monday—where does it fit into the provisions of this bill? 
I understand that a matter in here deals with client satisfaction. I do not want to go any further in discussing what that may mean for the bill. However it does show once again that the Labour Party when it comes to legislation that deals with anything relating to commerce the interests of the consumer or to small business has no idea whatsoever no care and no concern. It simply wants to put in place a number of regulations that make it feel happy about things and make it hard for small business in this country. 
Dr WAYNE MAPP (NZ National—North Shore) 
: I want to deal with the issue of computer software. When I look at this legislation it seems to me that the Government is relying entirely on judicial discretion. For instance it has not decided to define it as the Hon Tony Ryall pointed out as a licence for computer software. It has described the software itself as the good. It has ignored the submission of the Law Society that states that: “By defining software as goods”—and I am quoting directly from the submission on page 4—“there is a potential for confusion to arise regarding the property rights of the purchaser.” There was a possible solution that I thought the select committee would have taken the opportunity to apply—or at least the advisers to the Government or perhaps an alert Minister such as the one perhaps not in the chair—by referring to licences for computer software. We are now left with this only resolution to the problem. We are relying entirely on the courts to get it right and that they will interpret the words as in fact meaning a licence for software rather than the literal wording here. In the past when the Sale of Goods Act was enacted— 
Hon Judith Tizard 
: In 1908. 
Dr WAYNE MAPP 
: People tended to allow the courts to do that sort of thing. However today legislation is supposed to be specific. That is why thousands of law draftsmen are employed to achieve precisely that. Have they got that right? No they have not. Why are hard-working New Zealanders paying taxes to the Crown? Because they want good services under the charge of this Government. Yet poor legislation is presented to the House that has not been properly considered and does not take into account the submissions of the Law Society. Hence we are now thrown upon the mercy of the courts to get it right. 
They are the same courts that said that there was title to the seabed—and look at the chaos and confusion that has caused this nation and this Government. Ask Nanaia Mahuta. She and her colleagues know the chaos and confusion that it has caused and we read about it in the paper on a daily basis. Yet the Government is repeating the same error in the amendment to the Sale of Goods Act. 
One other point is the confusion about water. Part 3 refers to water being included as part of the Fair Trading Act. The select committee said that in the Sale of Goods Act it is understood that water includes potable water. Potable water is drinking water. I presume the term means essentially the same in both pieces of legislation. Is the Government now saying to New Zealanders that they will have rights for drinking water or water that is fit to drink but in respect of any other water—such as agricultural water water flowing through the proposed Project Aqua all of the irrigation projects throughout the South Island that may or may not be potable for humans depending on quality—that there are no rights other than common-law rights of course in relation to that; and that it is only the processed water through the municipal systems that has the statutory protections. 
I would have thought that in amending the Fair Trading Act to include water one would at least have defined it as a particular category of water. The select committee—and the judges will read this—is clearly of the view that water is only potable water so far as the Sale of Goods Act is concerned. That is yet another source of confusion. We on this side of the House have been saying that New Zealanders have been paying far too much in taxes for poor-quality government. 
STEPHEN FRANKS (ACT NZ) 
: The bill includes water electricity gas and a number of Acts but Part 4 has a very short and simple change to the Sale of Goods Act. I am always concerned when we fiddle with the Sale of Goods Act. It is one of the finest flowerings of the 19th century English commercial lawyers. It is a wonderful example of how to draft. It is a piece of law that does what English commercial law had a genius for doing. It does not to try to tell people how they should conduct their lives it does not try to tell people—merchants or anyone else— what contracts they ought to enter and it does not second-guess or prescribe in advance but simply writes down in elegantly simple language what the best custom of merchants was. 
So when I see the Sale of Goods Act being tinkered with by a bill that has some economic and legal nonsense in the other parts I am put on guard. I am a little bit baffled and part of it is simply the terms. There is a reference to emblements and I am not sure how one pronounces them; I never came across them in 20 years of practice. I wish we had the advantage of Mr Worth in the Chamber. I suspect that he would be able to help the Committee considerably with a word as mysterious as that. 
However I will have to commend the Minister on a feature I like to see. The definition of goods in the Sale of Goods Act will now have restored a word that I believe the original drafter probably had. Clause 13(a) restores the old legal term “choses in action” instead of “things in action”. We no longer have that discordant sort of mix of the vernacular and the technical. 
Hon Tony Ryall 
: I think it’s called the State school approach. 
STEPHEN FRANKS 
: It probably is but no longer do we have this ugliness and ignorance. We have a term that has been made elegant again however antiquated it may be. On that one feature I do commend the Minister and her officials for restoring a sort of symmetry that was once there in our law that has been so grossly attacked by the law drafters in so many other areas. It is a pleasure to see that there is still a consciousness of barbarism and that the barbarians have not completely won. I thank the Minister for that. 
 I do come back though: I am concerned that what was probably intended as the substantive change in this definition—that is sticking in computer software—was something that the Law Society was so unequivocal in recommending against. However I believe that the Sale of Goods Act is so well drafted that if we abolished consumer guarantees and fair trading and went back to the sale of goods we would be all happier wealthier and wiser. In this case the select committee has included computer software without recognising—or appearing not to recognise—that the sale as it is called is usually a sale of a licence. According to the Law Society we are putting New Zealand consumers at risk of uncertainty. Uncertainty means cost and it means business for the courts and business for the lawyers. In that respect it would be helpful if the Minister were able to elucidate as to why it chose and why the select committee chose to ignore the Law Society’s recommendation. 
I cannot imagine there was anyone with an enormous passion to see computer software put into the Sale of Goods Act particularly as the other parts of this bill had already stuck it into the Consumer Guarantees Act and into the Fair Trading Act. It would be helpful to know just why after such an admirable change to the wording of the definition of “goods” we then went ahead and did something without explaining given that a body as disinterested and presumably as expert as the Law Society recommended against it. 
DAVID BENSON-POPE (Senior Whip—NZ Labour) 
: I move  
That the question be now put 
. 
JOHN KEY (NZ National—Helensville) 
: Members will be aware that clause 13 in Part 4 tends to widen the definition of the term “goods”. It states that to avoid doubt the definition of “goods” includes computer software. The Law Society’s submission challenged that ruling on the basis that software is a licence. 
I ask the Minister in the chair the Hon Judith Tizard to clarify the issue of CDs and DVDs. I personally do not consider computer software to be a good. I agree with the Law Society’s view that there is a licence to use software. Let us expand our minds for a moment here in urgency to think about the issue of CDs. When I purchase a CD—the physical good—I want it to work in my machine. So that is a good. But if I happen to be purchasing a CD that is unknown to me—and let us imagine for a moment that I purchase a CD of Eminem I have a feeling that would offend me especially— 
Hon Judith Tizard 
: Your kids would love it though. 
JOHN KEY 
: My 8-year-old absolutely loves Eminem so I try to get him the toned-down version—the edited censored version. Under this definition would a CD like that be a good and what part of a CD is a good? Under this definition just as computer software is deemed to be a good would the music on the CD be a good? I think I am hearing the Minister say no. 
Let us think about DVDs.  
Once Were Warriors The Piano The Lion the Witch and the Wardrobe  
or  
Licence to Kill— 
there are hundreds of DVDs that we could think of. So I purchase a DVD and put it in my machine. The physical DVD is a good but would the actual contents of the DVD be deemed to be a good under the definition used in the Sale of Goods Act as amended by this legislation? I am not worried about the physical form of the CD because I can check that in the shop and there is only a limited number of things that can go wrong with it. But I am worried about what is actually on the CD or DVD. I suspect that the answer is quite correctly that CDs and DVDs are not covered by this bill. But it does cover computer software so when I go to the same store and buy my CD I am applying a different test to computer software than I am to CDs and DVDs. There is a great inconsistency here. I would not be surprised if we pushed this debate well into tomorrow in order to add this new category that I have now thrown up. This shows that the bill did not spend enough time in the Commerce Committee and why it is an absolute outrage that we are expected to rush this bill through under urgency— 
Dr Wayne Mapp 
: Why urgency? 
JOHN KEY 
: Exactly! Why are we having urgency when there is a clear loophole here for CDs and DVDs? 
I can think of another example. Would a franchise arrangement be deemed to be a good? The definition of “goods” includes “all chattels personal other than money” etc. We know the reason that money is not deemed to be a good. It is because Samuelson described money as value in exchange as the Associate Minister of Finance will know from his days in Economics 101. Money has no intrinsic value and therefore it would be ridiculous to define it as a good. In fact some people argue that money does no good and does not bring happiness. But would a franchise agreement for a KFC shop in Helensville be deemed under this definition to be a good? That is a very challenging question and while we are here in urgency I am glad we have a number of officials to advise the Minister on whether a franchise agreement for a KFC shop in Helensville would be a good. If computer software is to be caught under the definition of “goods” in the Sale of Goods Act why is a KFC shop not a good? 
DAVID PARKER (NZ Labour—Otago) 
: I move  
That the question be now put 
. 
A party vote was called for on the question  
That the motion be agreed to.  
Ayes 67 
Labour 52; Green Party 7; United Future 8. 
Noes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 13 be agreed to: 
to omit paragraph (c) of section 2(1) from the definition of  
goods 
. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 67 
Labour 52; Green Party 7; United Future 8. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Tony Ryall to clause 13 be agreed to: 
to insert in paragraph (c) of section 2(1) in the definition of  
goods 
 after the word “doubt” the words “a licence to use”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8. 
Noes 67 
Labour 52; Green Party 7; United Future 8. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 4 be agreed to. 
Ayes 80 
Labour 52; New Zealand First 13; Green Party 7; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8. 
Part 4 agreed to. 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
: I move  
That the Committee divide the bill into the Commerce Amendment Bill the Consumer Guarantees Amendment Bill the Fair Trading Amendment Bill and the Sale of Goods Amendment Bill pursuant to Supplementary Order Paper 78. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 80 
Labour 52; New Zealand First 13; Green Party 7; United Future 8. 
Noes 35 
New Zealand National 27; ACT New Zealand 8.