Franks Stephen: Credit Contracts and Consumer Finance Bill — In Committee 
Franks Stephen: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8839] 
STEPHEN FRANKS (ACT NZ) 
: 
 This bill does bring out some strange things. Every now and then I am reminded of why I am not in the National Party. Mr Lindsay Tisch explained—in rather mild terms—a few of the stupidities in this bill and said that the National Party was against them. Then he told the Committee that National would support this bill when not only this part but the entire scope of this bill is already covered by a very adequate settled piece of law the 1981 Credit Contracts Act; legislation about which there has been almost no complaint in an area of industry that has expanded vastly—and we get this drivel and the National Party decides it will support it. I suppose it is one of the benefits of MMP that I can be in this Parliament and not have to associate myself with that through some sort of party discipline. I cannot imagine how the National Party has reached that position. 
I look at just one of the items that Mr Lindsay Tisch mentioned—the regulations. Clause 111 now has a new provision that allows the Governor-General to prescribe all the assumptions that may be made to simplify disclosure. It is not very often that the law becomes dramatically worse from the time it is introduced to the time it is reported back by a select committee. At least the bill as introduced set out the assumptions in the schedule to the statute. At least the criminal penalties that would apply for breaches related to something that someone could look up and know that Parliament had addressed its mind to what the consequences would be of non-compliance and how easy it would be and that Parliament was therefore creating a law that it understood. But I look at schedule 3 and find it has been removed by the select committee. In reading it I can see why. The select committee went through and decided it was probably a little bit inaccurate. In all the months that the committee had the bill it was too hard to think what they would really do so the Minister has persuaded the select committee to take the schedule out and leave it to be decided later. So firstly we have something that is bad in principle; secondly it is impossible to debate that set of assumptions now because we do not know what the Minister will prescribe. It is all up to his or her discretion; and thirdly we have it in a form in which the assumptions could be entirely at variance with what Parliament believes they will be. 
That will now be an implication in looking at the legislative history of this bill. If anyone challenges the assumptions that the Minister decides are the assumptions of Parliament—because that is the effect of what is happening—on the grounds that the Minister is ultra vires and the court looks at what has been knocked out it will have to decide that there was something defective about those assumptions but it does not know what. It will have to decide that the areas covered were an embarrassment or that there was some serious reason that Parliament would not legislate for them. It will then try to imply from there some further assumptions of its own as to what Parliament might have anticipated or contemplated when it decided that it did not know what it meant. The bill now states that the Minister might know what Parliament meant and they will leave him to decide later. That is bad constitutionally bad in principle and bad outright. 
Another little gem in this bill is the conflict of laws provision. The bill as introduced was relatively straightforward. It said: “This Act applies to contracts governed by the law of New Zealand.” Now it says it applies to contracts governed by the law of New Zealand even if there is a choice of law provision that says they are not. The normal provision for the courts to apply is that the parties if they are competent adults can choose for themselves whether they will have their contract governed by another law. There are provisions that say that where a choice is entirely unnatural the court can overrule it. Now we have Parliament saying that competent adults cannot put in a choice of law provision. This might well affect for example closer economic relations. An Australian bank might not want to incur the cost of having to become familiar with New Zealand’s silly variant of Queensland’s credit contracts legislation and might want to do lending in New Zealand by the Internet under Queensland law but this little advance by this brilliant Government—that so understands relations with Australia—has decided that that is no longer possible.