Franks Stephen: Consumer Protection (Definitions of Goods and Services) Bill — In Committee 
Franks Stephen: Consumer Protection (Definitions of Goods and Services) Bill — In Committee 
[Volume:609;Page:6867] 
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.