Consumer Law Reform Bill — First Reading 
Text is incorporated into the Bound Volume 
Consumer Law Reform Bill — First Reading 
[Sitting date: 09 February 2012. Volume:677;Page:283. Text is incorporated into the Bound Volume.] 
Consumer Law Reform Bill 
First Reading 
Hon CHRIS TREMAIN (Minister of Consumer Affairs) 
: 
 I move  
That the Consumer Law Reform Bill be now read a first time. 
 I nominate that the Consumer Law Reform Bill be referred to the Commerce Committee. The National Government is committed to a brighter future for New Zealanders. This includes a strong commitment to strengthening and building our economy. A brighter future is a future where New Zealanders from all backgrounds and walks of life have the opportunity to better themselves and to achieve the living standards they aspire to through hard work and it is a society where we have the resources and the laws to protect the most vulnerable. The Consumer Law Reform Bill before us today is one of the policy initiatives that will help to achieve this goal. It is a key element of National’s 120-point economic development plan. Strengthening and building our economy requires a series of good policy decisions and reforms and this indeed is one of those.  
For consumers ineffective laws may mean a lack of information and choice leading to poor purchasing decisions. Ineffective laws may also mean that consumers are not provided with the avenues to have their problems with goods and services resolved and their rights protected. In contrast confident consumers who demand high-quality goods and services make good choices and seek satisfaction when their purchasing expectations are not met—an essential component of effective markets. Effective markets in turn drive competition innovation and economic growth.  
Consumer law is part of the Government’s commitment to improve the quality of regulation. The Government’s regulatory reform agenda seeks to have in place laws that are sound and relevant. Laws that have become out of date and need to be worked around are an unnecessary compliance cost for businesses and consumers and in this case the reforms drive change from over a 20-year period.  
I would like to take this opportunity to thank the former Ministers of Commerce who were previously responsible for this bill: Heather Roy John Boscawen and Simon Power. Their hard work has resulted in a much-needed piece of legislation that will be welcomed by consumers. Can I also acknowledge the hard work of the officials from the Ministry of Consumer Affairs whom I believe have worked very hard to see this in its first reading here today in the House.  
The main objectives of the bill are to strengthen consumer rights to simplify business compliance to make consumer legislation more accessible and understandable for consumers and businesses and to have effective and enforceable consumer laws. Another key objective of the bill is to update and modernise consumer legislation. The three main consumer laws—the Fair Trading Act the Consumer Guarantees Act and the Weights and Measures Act—are all sound but have not been amended in over 20 years as I mentioned previously. Over the same time period there have been changes to the way consumers transact with businesses. As a result our consumer laws are not adequately dealing with a number of modern transactions such as online auctions supermarket self-service systems door-to-door and telephone sales using credit cards and also the sale of extended warranties.  
A further objective is to achieve harmonisation with the Australian consumer law as appropriate and again in accordance with the Government’s agenda of a single economic market with Australia. I would like to acknowledge the support that has been received from our Australian ministerial colleagues and their officials in the policy development of this Consumer Law Reform Bill. Australia and New Zealand have both undertaken significant reviews of consumer law at the same time and this has allowed for some real-time harmonisation of our laws. The Australian consumer law came into effect fully on 1 January 2011. We have been able to take advantage of Australia’s legislative developments and it has put in place provisions that are substantially the same as our consumer guarantees.  
I will now outline some of the main features of the Consumer Law Reform Bill. Broadly the bill amends the Fair Trading Act 1986 the Consumer Guarantees Act 1993 and the Weights and Measures Act 1987. The bill also provides for a new Auctioneers Act and repeals four other pieces of consumer legislation.  
Firstly the bill will add purpose clauses to the Fair Trading Act the Consumer Guarantees Act and the Weights and Measures Act. The first part of the purpose clause for each Act will be the same saying that: “The purpose of the Act is to contribute to a trading environment in which—(a) trading is fair; and (b) there is effective competition; and (c) consumers and businesses participate confidently.” These words emphasise that consumer laws are strongly principles-based. They provide the framework for consumers and businesses to conduct trade. The purpose clauses reflect that these laws are about delivering positive outcomes for both consumers and businesses and delivering effective markets.  
Secondly the bill makes fundamental changes to the Fair Trading Act. These include provisions that a person must not make an unsubstantiated representation. Traders and retailers must have reasonable grounds for any claims that they make. New modern provisions are added to the Fair Trading Act relating to lay-by sales unsolicited goods and services conduct at auctions extended warranties and uninvited direct sales. For example rules surrounding direct sales such as door-to-door or telemarketing sales will now apply to all types of transactions over $100 including cash and credit.  
The bill will also give the Commerce Commission a wider range of enforcement tools to enable it to more effectively monitor and enforce the Fair Trading Act. As some members will know I have a personal interest in the new auctions conduct provisions. These have the objective of making the rules and consumer protections that apply to auctioned goods much clearer.  
The third area of reforms relates to the Consumer Guarantees Act. Until now goods sold by auction and on sites like TradeMe have been exempted from the Act. Sales by professional traders using TradeMe-style auctions will now be covered which I know much of the market is pleased to see. However there is still an exemption for second-hand goods sold at auction by a registered auctioneer.  
There are provisions in the bill concerning the acceptable quality of electricity and gas. The Consumer Guarantees Act is amended to provide that retailers may seek indemnity from distributors when consumers raise product quality issues.  
There are also provisions in the bill to provide that the service guarantee in the Consumer Guarantees Act applies when using carrier services such as couriers and there are associated amendments to the Carriage of Goods Act requiring that a carrier must offer contract for carriage at the limited carrier’s liability or declared value risk. I am sure the select committee will focus on that one. The bill also provides for an increase in the limited carrier’s liability from $1500 to $2000. I am aware that there is some concern about whether this increase has been set at the right level and I will invite the Commerce Committee to give particular attention to this particular matter.  
Fourthly providing consumers with access to redress is just as important as providing consumers with rights. I have particular interest in ensuring that consumers who have problems with the goods and services they have purchased have accessible and free or low-cost dispute resolution available to them. I am pleased to say that the Consumer Law Reform Bill extends the scope of the disputes tribunal to consider section 9 of the Fair Trading Act. The disputes tribunal will play an important role in providing low-cost access to justice in cases of misleading and deceptive conduct by traders.  
Fifthly the Weights and Measures Act regulates accuracy of weighing and measuring instruments. The Act will be updated and extended to provide for new retailing approaches such as supermarket self-checkouts and to ensure that consumers can see weighing instruments and recorded weights in order to be satisfied there are no weighing anomalies.  
Sixthly and lastly the bill also provides for a new Auctioneers Act which will require auctioneers to meet a minimum number of standards including accounting for the proceeds of an auction and displaying their licence.  
Two matters that are not included in the bill but which were considered by officials and are covered in the regulatory impact statement are unfair contract terms and unconscionability. I would like to invite the Commerce Committee to also consider examining whether the Fair Trading Act should provide for these protections. These are included in the Australian consumer law and many other jurisdictions provide for these protections. It is important that New Zealand also properly examines whether they should be included in our own consumer laws.  
Strong and relevant consumer laws are important both for consumers and for businesses. Consumer laws are a part of the fundamental legal infrastructure that helps markets operate efficiently and effectively. Working alongside and supporting competition law consumer laws underpin all business-to-consumer market transactions. As a consequence it is critical to ensure consumer laws are working as intended and remain relevant in the face of changes to the way in which markets operate and consumers and businesses transact. Confident consumers help to create a competitive business environment and a productive and innovative economy. The reforms contained in the Consumer Law Reform Bill will be a significant step forward for consumer law and regulatory reform in New Zealand. I commend this bill to the House. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
:  
I am pleased to speak in the first reading of the Consumer Law Reform Bill as the Opposition spokesperson on consumer rights and standards. Because this bill traverses both the consumer rights aspects and some product standards issues I am really pleased to be able to make this contribution. 
I want to reflect a little bit on the journey that this bill has taken to get to here. I have in front of me a copy of a speech that the Hon Heather Roy gave in November 2009. In that speech she talked passionately as she often did when speaking for the Association of Consumers and Taxpayers; I think we forget that the ACT Party is an acronym for the Association of Consumers and Taxpayers. She was delighted to be the Minister of Consumer Affairs and to see that portfolio sit with the ACT Party. So I certainly look forward to Minister John Banks’ contribution to this debate because I am sure he will want to make a substantial contribution recognising that both Heather Roy and John Boscawen after her took on this really important role. 
When Heather Roy spoke she spoke about One Law-One Door—I guess a variation on the “one law for all” that the ACT Party was normally referring to. The One Law-One Door concept was actually one that I think had some resonance in this field because there are a myriad of pieces of legislation. There are I think seven consumer laws and two business laws that this piece of legislation relates to and I think that the concept of bringing them together into one legal framework is a very positive one. So we are very pleased to be seeing the bill in front of the House and obviously we will be supporting it to the select committee. 
The “one door” though does not necessarily find itself addressed in this particular legislation. I think it is interesting that the Minister concluded I think by referring to some of the things that were not in the legislation particularly in relation to some of the Australian issues—unconscionability and making claims that cannot be substantiated which are unfair practices. The Minister I think was indicating that the select committee could actually have a serious look at those issues and that he would be willing to— 
Hon Chris Tremain 
: Unsubstantiated claims are in it. 
Hon LIANNE DALZIEL 
: They are in it but unconscionability is not and that is certainly something that is reflected in the Australian legislation. I think with the general focus on the single economic market it would be a good thing for the select committee to have some detailed look at that. I know that for myself when I was a Minister of Commerce it was something that I was quite keen to see us pursue in the legislative frameworks that we were considering at the time. 
So I think it is helpful when a Minister does say that there are opportunities within the select committee to hear what submitters have to say and then potentially report back something with some significant changes. I think that is a positive thing so I am very pleased. That certainly was the history of the relationship that we had with the previous Minister of Commerce and the previous Minister of Consumer Affairs as well so I am pleased about that. But I should reflect on the fact that this bill was on the legislative timetable in 2010 and in 2011 so it is a little bit of a shame that we have waited until 2012 before it has actually been introduced. But it is here and I want to speak positively about it because of what it is attempting to do. 
But I want to do something even more important. I know that none of the people on that side of the House are going to be surprised at what I am going to refer to and that is the two regulatory impact statements. I just want to say that these are the best regulatory impact statements I have seen in my time in Parliament. They are the best and I would like every single Minister in this Government to have a good look at these regulatory impact statements and think to themselves about how they might want to ensure that all regulatory impact statements meet this standard. This has set the bar in my view and that is because the regulatory impact statement—the first one that was prepared for the legislative timetable in December 2010—started off with the preliminary work. 
I really do want to congratulate those who have put it together. It is probably not surprising that the Ministry of Consumer Affairs sits with the Ministry of Economic Development and the Ministry of Economic Development would certainly have been looking over its shoulder in terms of the detail of this. I am sure the deputy secretary would want this to be as good as it has been. But to set out what the status quo is the status quo actually identifies what the regulatory frameworks are at the moment. So you have got a very simple snapshot of what all of those pieces of legislation do in a nutshell and I think that is an incredibly useful starting point. 
But then the most important part of the process—because you cannot get to the end point until you do this—is problem definition. And I have to say it warmed my heart to see a document that actually said “problem definition”. The problem definition talked about a number of factors that had been brought to the Government’s attention by way of some analysis around consumers’ knowledge of their own rights and where they could go to have them addressed. So I just cannot really applaud loudly enough the extent of the work that has gone into these statements. 
The next is the regulatory impact analysis and what it has done is look at consumer and business detriment as a result of consumer laws not meeting the objectives that are set out using the OECD  
Consumer Policy Toolkit 
 framework. That analysis looked at unfair contract terms and standard form contracts unconscionability making claims that cannot be substantiated lay-by sales unsolicited direct sales unsolicited goods and services Consumer Guarantees Act statutory guarantees and auction conduct and licensing. Then the document goes through each and every one of them and it does it in a very simple form that people can follow. It says: “What is the problem?”. It talks about the measure of consumer detriment and the magnitude of that problem. It then talks about the nature of the detriment the scale of consumer detriment and the measure of business detriment and then the likely consequences of taking no policy action—namely the cost of the status quo. That identifies the cost to consumers the cost to businesses and the cost to the Government. I mean I honestly have not seen a document more significant than this in considering a regulatory impact analysis. 
The policy options are then set out: no change or to add provisions to the Fair Trading Act—the same as in the Australian consumer law—and then to add provisions to the Fair Trading Act on unfair contract terms or to add provisions to the Fair Trading Act on “unfair contract terms similar to …” etc. The ministry favours a particular option and sets out both the benefits and the costs. It goes through each one of those headings on the same basis. Again I think it is absolutely extraordinary that it has gone into this extent of detail and I am very pleased to see it. 
The second regulatory impact statement relates to the changes the additional options that were identified to address problems that have been identified with consumer laws not adequately meeting the objectives of consumers who are able to transact with confidence and businesses that are able to compete on a level playing field. Again this identified areas where the public did not know what their rights were and in fact businesses found it difficult to work their way through a myriad of issues. One of the classic ones is the extended warranty. I do not know how many members in this House have had the experience of buying an appliance and being offered an extended warranty—which is completely and utterly meaningless if you do not comply with the obligations under the legislation. 
So I think that the Ministry of Consumer Affairs can take great credit for the background work which I think will facilitate the work of the select committee. Labour will be supporting this legislation’s referral to the select committee and we look forward to its progress. 
TODD McCLAY (National—Rotorua) 
: 
 Confident consumers who are able to make informed decisions are a necessary and important part of an effective market. This drives competition innovation and economic growth. I thank the Minister of Consumer Affairs for bringing the Consumer Law Reform Bill to Parliament. I believe it is a very important part of much of what this Government is about. Consumer law reform is an element of the Government’s 120-point economic development agenda. Therefore stable markets based on sound consumer law are essential for economic growth.  
 I start by recognising the last speaker Lianne Dalziel and say to her that I am glad that Labour will be supporting this bill to the Commerce Committee and I look forward to working closely with them on the Consumer Law Reform Bill in the committee. It is good to hear such a positive speech at the beginning of what I believe is a very important piece of legislation for all New Zealanders those who manufacture and trade and those who consume. It contributes to a trading environment in which trading is fair. There is effective competition and consumers and businesses participate confidently. Consumer laws are some of the most fundamental laws that we have in this country. All transactions between consumers and businesses must be dealt with and are the cornerstone of an effective market.  
Our consumer laws in this country have not been updated for almost two decades and therefore they must be well out of date by now. Just think how much trading has changed over the last little while. Can I say to you that dealing with modern transactions such as online auctions supermarket self-service systems and telephone sales using credit cards are not adequately dealt with under current laws. Industry and consumer groups have been seeking improvements to consumer law for some time and to make legislation more modern and more workable. Well as Minister Maurice Williamson says it is more good news. This bill will deal with that. Can I also say to you that clear consumer laws enable people to shop with confidence protect suppliers and consumers from inadequate market conduct and enable businesses to compete fairly.  
Now this bill does a number of things. The bill adds purpose clauses to the Fair Trading Act the Consumer Guarantees Act and the Weights and Measures Act. The first part of the purpose clause for each Act will now be the same stating that the purpose of the Act is to contribute to a trading environment in which trading is fair there is effective competition and consumers and businesses can participate confidently. It will deliver positive outcomes for both consumers and businesses in an effective market place I believe.  
I want to touch just very briefly on each of those Acts in the way that they will be changed and the effect that that will have. For the Fair Trading Act it will state that a person must not make an unsubstantiated representation and traders and retailers must have reasonable grounds for any claims that they make. The Fair Trading Act will be modernised with new provisions covering lay-by sales unsolicited goods and services conduct at auctions extended warranties and uninvited direct sales. Actually these are issues that I think many members of the House are contacted about by their constituents when they have concerns when they wonder what provisions of coverage and support they have or when they believe that retailers and others may not have been acting appropriately towards them. I think consumers will be happy with the changes that are being proposed.  
The scope of the unsafe goods notices and product recalls will also be extended. The bill will provide for mandatory notification for recalls of unsafe products. The Consumer Guarantees Act will be amended. The Act currently has an exemption for goods sold by auctions. This will be removed so that sales by professional traders using the likes of TradeMe-style auctions will now be covered by the Act. But importantly there will still be an exemption for sales of second-hand goods by a registered auctioneer. Those who are not professionals and who just sell goods will not be covered by the Act.  
Finally consumers will have access to redress and this is very important when something goes wrong. We have heard others previously say that we need to be looking at reducing bureaucracy on businesses but also when it comes to consumers seeking redress. So the Consumer Law Reform Bill extends the scope of the disputes tribunal to consider section 9 of the Fair Trading Act which covers misleading and deceptive conduct. This enables the Government to provide better low-cost access to justice for all consumers. I look forward to this bill coming before our committee and the work we will undertake seriously. Thank you. 
Hon CLAYTON COSGROVE (Labour) 
: 
 I follow colleagues Mr McClay and my parliamentary colleague Lianne Dalziel in supporting the Consumer Law Reform Bill. I think it is probably one of those pieces of legislation where there is not a lot of argument. I agree with Mr McClay that our respective offices and most of the colleagues would be inundated by people who went into transactions—whether it was to buy a washing machine or whatever second-hand or new—in good faith because there was a time of course in New Zealand when deals were done on handshakes consumers paid the debt on time and if the goods sold to the consumer broke down the seller would go and repair them and sort it out. You did not need vast amounts of legislation.  
Sadly those times have changed. I think what both parties to a transaction seek ultimately both the consumer and the seller if you will is openness transparency and accountability in essence so the good or service does what it says it is going to do—it performs—and if it does not it is remedied and people can get redress.  
I recall—and I know it is slightly off the edge Mr Deputy Speaker but I am sure you will indulge me briefly—my time in Government when we dealt with reasonably controversially the real estate agents sector. Before I start getting phone calls emails and death threats let me say that in all sectors including politics—you know one bad politician and we are all a pack of so-and-sos—you are judged by the lowest common denominator.  
Many good people in the real estate industry were judged by those in the industry who bluntly ripped consumers off. It is an interesting example actually which I think is germane to this whereby an industry—and I believe that industries can self-regulate when they do it right better than Governments can actually; that is my own personal view from a commercial background—was given a number of opportunities to reform itself and provide accountability transparency and openness whereby consumers were dealt with fairly and consumers could get redress and accountability when people behaved inappropriately in the industry.  
That industry had railed against that for years rejected it then at that point public pressure built to a point where the Government—the Government I was a part of—had to step in. I do not think we want to get to that point. The place is littered with the metaphorical bodies of people who were done over by sharks in that industry and there was very little in the end that we could do retrospectively about that. So I think this legislation is good in that we move forward. It is sad that we have to put in regulation what was the old Kiwi handshake. Times have changed sadly; technology has changed; and people act—some very few—in nefarious ways.  
The other point I want to make in respect of this legislation is that it is also necessary I think because—and I mean no disrespect to the communities when I say this—we do have a difficulty with basic financial literacy. Many folk do not have the confidence to be able to weave their way through the provisions—certainly with legislation like this some of us who are not lawyers struggle each day with it—knowing their rights knowing that they can execute those rights and knowing what their responsibilities are and also business folk knowing what their responsibilities are.  
Financial literacy is passion of mine and I think we have to do something serious about that so that people do have better financial literacy and do have more confidence when they are dealing with that—you know whether it be a flash transaction or sorting out your credit card arrangements. People need to know what it means if they are going to get into debt and know what the implications of a hire purchase are. As a country we do like spending money and knowing the ramifications of debt hire purchase and those sorts of things and knowing what you can do to protect yourself so you are not ripped off is I think ambulance at the top of the cliff stuff. It gives people confidence when they are entering into even basic transactions like as I say putting the fridge on hire purchase because they know what the ramifications of that are and they know they have some redress.  
This bill brings us into line of course substantially with Australia. Given that Australia is one of our biggest markets and also our closest neighbour in terms of the commerciality let alone the culture this is a good and sound piece of legislation. I would note in passing Lianne Dalziel’s point that this has sat around for a while; it has got a couple of inches of dust on it over the years. One of my colleagues over there said that National has a 120-point action plan. Well I think this bill should have been in the upper part of the 120 points. I would love to see them if a member wants to send me the whole 120 points. It would be a cracker to read over the cocoa tonight and go through but this is important legislation.  
There are some people who yawn at this sort of stuff. They are generally those people who have as I say a high degree of financial experience or those who have a certain amount of resource behind them and can get independent advice and can get the confidence to engage in these transactions. But for the vast majority of our community you know it is a serious deal when you are spending money and consumer protection has to be paramount in this.  
We need to look further I think perhaps at our banking industry and perhaps at those who provide finance to consumers given that there are two sides to it. We need to increase our financial literacy but people also have a responsibility if they get into debt to meet their obligations in terms of payments. However there is also I think a counter-obligation—that the provider of that debt finance has actually got to be very open and transparent about the interest rates and the penalties and all those sorts of things.  
There are a number of issues dealt with here in terms of the consumer. But I think we actually have to have a look at maybe the banks at some of the bigger issues especially around credit cards and a few things like that where it is not an issue of saying that somebody is bad for non-disclosure or for disclosing in a certain way called fine print but is more about saying: “OK we will educate people.” But we have also got to ensure that those providing for instance finance are very very open about the ramifications of providing that finance and the responsibility you take on when you go into debt.  
So we support this piece of legislation. We think it is good. There will need to be I think a fair bit of work once it is implemented around marketing it to people and assisting for instance business folk. We have just done a tax bill; now this thing. These are good measures but of course for small businesses especially it is another thing they have to read another hour in the day when they have got to come to grips with the requirements on this and for every hour they are spending doing the work of the Crown if you will it is as I said in the last bill another hour that they are not spending behind the counter growing the business and selling the product so they can employ more people etc. etc. 
 So I think the Government needs to commit to providing a fair bit of resource around assisting consumers to come to grips with their new protections and rights but also around assisting those business people to make it easier for them to implement and comply—because most if not nearly all will—with the requirements and responsibilities within this legislation.  
It is nice in the first week of Parliament that we deal with some bipartisan if you will legislation—I am sure that we will get to the gritty stuff in the next few weeks. But this is an important bill. It is not something that a certain commentator should yawn at. I am sure that it will not get the high media profile that other more colourful times in this Parliament had but it should as it is very important legislation. I was not part of the select committee when this was dealt with but I commend the committee for its work and we look forward to the bill’s passage and scrutiny through the parliamentary process. 
KEVIN HAGUE (Green) 
: 
 I begin by congratulating you Mr Assistant Speaker Tisch on your reappointment. I also congratulate Minister Tremain on his first piece of legislation before this House in his ministerial capacity. I rise to speak in support of the Consumer Law Reform Bill today for the Green Party in place of my colleague Mojo Mathers who will lead the Green Party’s further work on this bill. But sadly the technology is not yet in place to allow her to participate fully in this debate. That is a matter for regret and hopefully rapid remedy. We support the general intent clearly of a bill like this to modernise and rationalise legislation and introduce things like standard definitions covering sales processes that were not even conceived of at the time that some of this legislation was put in place—credit cards internet sales and various of those things. I think Lianne Dalziel mentioned the fact that some of the legislation this replaces is almost a century old. The Auctioneers Act 1928 probably is overdue for a bit of an overhaul. 
 We support the new provisions being included related to unsubstantiated representations. We think it is very important that consumers should get the full facts and we draw attention to a particular use of the new provisions in relation to “greenwash” and we hope that this bill when enacted will see a reduction of that pernicious practice. There are far too many examples of people seeking to benefit from association with the qualities of environmental friendliness or ethical value without the expense involved in making their claims real. I am not sure whether this legislation will extend to political parties in that regard but certainly that might be a matter the select committee could consider. 
We also support in particular the aims of the legislation regarding product safety. The Ministry of Consumer Affairs warned the Minister of Consumer Affairs back in 2009 that these product safety risks were on the increase and that there was an international consensus requiring some more effective action. In 2007 the United States Consumer Product Safety Commission oversaw the largest annual number of voluntary product recalls in the last decade. At the same time the European Commission saw a 47 percent increase in notifications of products posing serious risks to consumers with half of those products originating in China a country with which we now have a free-trade agreement and a burgeoning import trade. 
The Ministry’s report said New Zealand’s current model was “skewed toward rapid reaction to incidents rather than taking a more proactive approach to emerging risks.” Well with this legislation I do not think we could accuse it of being a rapid response or rapid reaction but at least it is finally in the House. Consumers have a right to know that the goods that they are purchasing are safe and that they and their families will not be injured through dodgy appliances or products.  
We also support the strengthening of rules around direct sales. We are pleased that legislation is finally tackling the scourge of the uninvited salesperson. The legislation sets out rules for uninvited direct sales and repeals the Door to Door Sales Act 1967. 
We also believe that consumers deserve protection from unfair contract terms and I was very interested in the Minister’s comments about that. I am very pleased to see that he is intending and directing the select committee to take a look at re-inclusion of those provisions in the bill. It is a great shame that the Government did not do that in the bill that we are considering today because protection from unfair contract terms buried in small print is one of the principal problems that in fact consumers face. New Zealand’s biggest consumer advocate group Consumer New Zealand has been particularly critical of the decision to omit that provision from this bill. The Government’s reasons for omitting that are far from clear and certainly the Minister and Mr McClay when speaking to the bill today did not make it clear why those provisions had been dropped. We believe there is certainly a strong case for following Australia’s lead and making it easier for consumers to challenge those unfair contract terms in standard agreements for things like car rentals and gym memberships which are some of the examples that have recently been in the news media. We do not suggest that New Zealand should slavishly follow Australia’s lead but this does seem to be an area where harmonisation would benefit New Zealanders. 
The terms in contracts are typically contained in pre-written standard-form contracts often in dense fine print which the previous Minister of Consumer Affairs accepted was sometimes one-sided and usually signed by consumers without reading. Sometimes those contracts are signed by some of the most vulnerable in our community perhaps like those with poor English language skills the elderly or the disabled. It is a great shame that provisions protecting those groups have not been included in the bill at this time but as I say it is good that the Minister is intending that they will be considered by the select committee. 
I note with interest that the Direct Selling Association of New Zealand vigorously opposed including an unfair contracts provision in its submission to the Ministry of Consumer Affairs on the discussion paper and I do hope that that was not the submission that swayed the Government to exclude those terms. The reasons the Direct Selling Association gave were that such provisions would add to compliance laws and that existing laws were already adequate and I think that is probably something we have heard on a number of occasions. I think most New Zealanders would disagree with that statement and certainly the ongoing popularity of the  
Fair Go 
 television show would indicate otherwise. 
We also share TradeMe’s concerns that professional traders are not forced by this bill to disclose themselves as such and I would hope that the select committee will also look at that matter. It seems a missed opportunity that the Ministry of Consumer Affairs considered including a requirement for professional traders to disclose that fact but it has been excluded. Traders who identify themselves as professionals could then more easily be held to legal obligations including the requirement to offer refunds on shonky goods and to pay tax on their profits. The Arthur Daleys of this world are no longer selling second-hand motors in brown leather jackets from lock-ups; they are now online and TradeMe’s recommendation I think should be taken very seriously.  
The previous Minister of Consumer Affairs John Boscawen said the issue of identifying professional traders could be looked at again at the select committee and I urge the current Minister Mr Tremain to do so.  
The fact is that most businesses are fundamentally concerned with profit maximisation; indeed probably all should be. One maximises profit by maximising sales and minimising costs. At the same time that profit motivation is probably universal amongst businesses the ethical standards that go with that are not necessarily universal. Although some businesses may have a business model that relies on long-term relationships with customers and repeat sales others have a business model that relies on one-off sales. The temptation to take shortcuts and to mislead consumers if they believe they will get away with it is one that many businesses are shown to often take. I think it is very important that this bill does protect consumers from that. I was very heartened to hear the Minister’s comment about the Government’s commitment to improve the quality of regulation in this field and in others I hope.  
KANWALJIT SINGH BAKSHI (National) 
: 
 First of all I would like to congratulate the Hon Chris Tremain on the introduction of this bill which is the first major reform in two decades. I support this Consumer Law Reform Bill. This bill represents an example of modernising and maintaining the relevance of legislation in line with regulatory responsibilities. The Consumer Law Reform Bill seeks to ensure that the laws which protect our citizens are up to date so that consumers can undertake the sale and purchase of goods and services with confidence. By introducing this bill once again we ensure that the National Government is committed to the protection of buyers and sellers in New Zealand. We want to create an atmosphere where both buyers and sellers who obey the law of the land are protected against unlawful conduct by those who do not obey the law. This bill will strengthen consumers’ rights and it also acknowledges the interests of businesses. It will also simplify and clarify business compliance and create a more even playing field where reputable businesses are rewarded.  
The bill makes a number of significant changes that I would like to acknowledge and commend. The Fair Trading Act prohibits both misleading and deceptive conduct and false or misleading representation. However this is difficult and expensive for the Commerce Commission to enforce. This bill prohibits unsubstantiated representations from being made about a product or service unless the person has reasonable grounds for the claim. The bill provides that the person may later be asked by the Commerce Commission to substantiate any claims that have been made about a product. A defence built into the bill is that the person can rely on the information they obtained to support the claim. The unsubstantiated representation protection will help to prevent fictitious claims being made by businesses for commercial gain thereby improving consumers’ confidence and creating a level playing field for all businesses.  
New Zealand’s consumer laws are either self-enforcing or enforced by the Government when carrying out its investigation and prosecution functions. Good consumer law needs to be both enforceable and enforced. It is therefore important that for the enforcement appropriate provisions are in place. The bill identifies two areas of enforcement that could be improved; hence the inclusion of court-enforceable undertakings and management banning orders in the new Fair Trading Act provisions. The Commerce Commission may currently enter into an agreement with a person to amend their behaviour as a result of an apparent breach of the Fair Trading Act. At the moment however such an agreement is not easily enforced if it is breached. The Commerce Commission enforces the Commerce Act and the Financial Markets Authority has court enforcement undertaking powers. The provisions in the bill will give similar powers under the Fair Trading Act.  
At the moment there is an unintended incentive for the Commerce Commission to prosecute a person to ensure a result. The bill proposes to make an agreement entered into legally enforceable. This will allow the Commerce Commission to take the person to court if an agreement is breached creating more transparent and enforceable law. The bill also proposes the introduction of management banning orders: penalty provisions for use in the situation when an individual has been convicted for repeat offences under the Fair Trading Act. A management banning order is something I consider to be significant because a personal consequence is that it can seriously affect a person’s future earnings. However in some cases the fines imposed are not a significant enough deterrent to prevent future undesirable trading activities.  
It is because of these two and many other welcome changes that I lend my support to the Consumer Law Reform Bill. 
TRACEY MARTIN (NZ First) 
: 
 Firstly I acknowledge the comments made by the Hon Clayton Cosgrove around financial literacy. As a previous credit controller which is in reality a fancy name for a debt collector I say there is certainly room for some improvement around the way that we educate and protect particularly our young people as they enter into debt in this country. If there is any room or some latitude inside this bill to address that it would be welcome.  
I stand here on behalf of New Zealand First to speak in support of this bill the Consumer Law Reform Bill. New Zealand First notes that the specific objectives of this bill are to create an environment where consumers are able to transact with confidence businesses can compete on a level playing field and consumer laws assist in facilitating mutually beneficial trade. We acknowledge that with the large leaps in information transfer and modern technology improvements especially in the ability of consumers these days to transact business online with the creation of internet auction houses and e-stores as just two examples there is a need to overhaul and retool much of the seven consumer laws and two business laws currently affected by this bill.  
 A clear example of the need for this reform would be the Sale of Goods Act 1908. There was no way of course that the authors of that legislation could have foreseen the online auction houses of TradeMe or eBay and craft content to give consumer confidence to those transactions. New Zealand First agrees that consumer law should facilitate mutually beneficial trade on equitable terms and that trade partners should have trust that our laws deliver safe products and products that are consistent with any measure quality or other claim made.  
There are certain suggestions in the bill that New Zealand First will be looking forward to discussing further as the bill moves through the House. For example as we legislate to implement a certain standard for our own businesses and transactions what is our commitment to ensuring that the level playing field we are aspiring to achieve will apply to other nations with whom we trade that are outside the promoted trans-Tasman economy? We heard earlier today in this House a comment from a Minister on the India plan and the China plan and New Zealand First would like to be assured that the intent of this bill will be given consideration to in those plans. But let us be clear that this bill as the impact statement points out is one of the platforms for the Government’s single economic market agenda with Australia and New Zealand First will be looking forward to seeing that the single economic market provides a level playing field for New Zealanders.  
I can give an example of why we want to have the people of the Commerce Committee make sure that that is at the forefront of their minds as we go forward. In Rodney we have one of the world’s leading glass manufacturers of strengthened and toughened glass and recently this company purchased a glass-bending machine from China at the cost of $1 million. The machine was subsequently delivered complete with technicians to put it together and to make it go. Now the machine itself is around about the length of this Chamber and probably reaches up to the gallery so it is a sizable piece of equipment. It heats different thicknesses of glass sheets to the required temperature to allow the product to be curved and bent to the required specifications—predominantly for superyachts. Unfortunately when the accompanying technicians had completed assembling the machine it did not go. The imported technicians had another go took it apart and put it back together again—still nothing.  
Now as we all know in this House time is money in business so as the dollars ticked by through lack of production the New Zealanders asked the Chinese technicians to step back and let them have a go. It took close to another half a million dollars to bring that machine online—a loss of time money and production that in these current times is even more keenly felt by our business community. So as I say it will be with interest that New Zealand First looks to see that the sorts of protections we might be able to provide in circumstances such as this and that this bill will provide currently in the trans-Tasman market can be extended across these other markets.  
We also note that it is suggested that a benefit of this reform will be that carrier services such as couriers will be subject to the Consumer Guarantees Act and I can say that I know many a small winemaker in New Zealand who will greet that news with some delight. We do caution however that as pointed out by the previous Minister of Consumer Affairs in March 2011 this bill “represents the most significant changes to consumer laws in more than two decades” and as such requires robust discussion and debate to make sure that any review meets the needs of New Zealand’s consumers and business communities. But as I say New Zealand First supports this bill and looks forward to the wider debate. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a joy to stand up here and speak on the Consumer Law Reform Bill and to hear from around the House that there is universal support for what is an important piece of legislation not just for our consumers but also our businesses.  
Mr Deputy Speaker may I take the opportunity in my first speech in the House of this the 50th Parliament to congratulate you on your appointment and also to congratulate our Minister Chris Tremain who is bringing this important piece of legislation to the House. I also want to take just a quick opportunity to thank all those people in Maungakiekie—certainly those who supported me but all the people back home. Thank you for putting your support confidence and trust in me as your local member of Parliament.  
This legislation supports the Government’s clear agenda which was set out in the Speech from the Throne about managing the Government’s finances about producing a more competitive and productive economy and about delivering jobs opportunities economic growth and prosperity for our country. It does that by allowing in our consumer transactions confident consumers who may be able to make informed decisions around effective markets. The balance that must be found in this legislation is to balance as my colleague from the Green Party said the rights and desires of our businesses to maximise profits and drive economic growth with the needs of consumers—some of whom are vulnerable consumers—in our communities and to protect their interests in some of these commercial transactions.  
It really is about principle-based legislation so that trading is fair and so that transactions are fair. But fair trading does not regulate for risk it cannot regulate for price and it cannot regulate for outcomes in competitive markets. As I campaigned and travelled throughout my electorate of Maungakiekie on the one hand you know I heard from my local businesses that the Government cannot over-regulate it cannot put too much compliance in our laws and our regulations and it cannot overburden businesses with tax and compliance. On the other hand numbers of people come through my electorate office seeking fair transactions having been the target of particularly unscrupulous moneylenders and the like. That is why this piece of legislation—as well as a piece of legislation that will be released later this year—is part of our programme to protect consumers particularly vulnerable consumers in areas like Maungakiekie.  
I am glad that financial literacy was mentioned today and I would add to that budgeting services which are critical for consumers to better protect themselves and to get better information around goods and services that they consume and purchase. But I think we have got to be careful that the overall bent of our legislation does not take away from the personal responsibility that consumers and individuals and their families must undertake when they go into such commercial transactions. I might just want to add that laws in themselves do not produce good outcomes. If we are going to regulate we need enforcement agencies that uphold the law enforce the law and bring about prosecutions when such laws are put in place. I certainly commend this bill to the House. I look forward to discussing the various parts of the bill within our select committee the Commerce Committee which is a very busy select committee. I commend this particular bill to the House. Thank you. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 Thank you Mr Deputy Speaker and I would like to add my congratulations on your re-election to the august position of Deputy Speaker. This is my first speech in the House this term and I would like to welcome all the new members here as well.  
I note the views expressed previously by my colleagues and by colleagues across the House about the importance of the Consumer Law Reform Bill and its status as a kind of bipartisan measure. There seems to be a lot of agreement around it which I think is a really good thing because ultimately it is about consumers about providing more protections for consumers and about bringing the protections up to date. So I would like to make a few comments about that and about what some of the implications of that are particularly with regard to the new technology—or not-so-new technology—about the encroachment of the online environment in our lives generally and about the importance of bringing legislation up to date across the spectrum which is essentially what this piece of legislation is doing.  
Before I do that though I would like to make special mention of where this bill came from along the lines of my colleague Lianne Dalziel. This bill has been a long time coming to the House and it probably should have been brought before the House well before now. I would like to make special mention of the previous Minister of Consumer Affairs John Boscawen in this area and of the work that he did on that. I know that my colleague Lianne Dalziel talked about Heather Roy’s contribution but I would like to acknowledge Mr Boscawen’s contribution and his commitment to these issues and also to the quality of the work around what underpins this bill I suppose around the importance of the wider spectrum of consumer law reform and also the seriousness with which I know the Commerce Committee will take it. We will be looking at it from a range of different perspectives and I am really looking forward to doing that particularly with regard to the impact of the consumer issues on the online environment and the special challenges that that raises.  
I would also like to make mention given that the previous speakers talked about it of the importance of balance and fairness in the legislation. Although I absolutely agree with them on that it did sound as if there was somehow a potential conflict between the importance of protecting consumers and the enabling of innovation to occur and business to get done. In regard to this particular bill I do not agree. I actually think that it is pretty clear that consumers and good law protecting consumers are what drive good business. Having strong and relevant consumer legislation is important for both consumers and business but it is good consumer legislation that is ultimately good for business and I think that is the important point to make here. If you have got good consumer legislation then you are going to have consumers who are able to make purchases in an environment that they know and trust and you are going to have good laws around them that are going to deal with the issues that should not be arising particularly the issues that should not be arising in this day and age around how people are purchasing more and more online and how people are purchasing more and more products in environments where they should not be being ripped off. So financial literacy is obviously an issue around that but to my mind we should be coming at this from the perspective of providing those things and putting things such as financial literacy and protections for consumers in place in order to ensure that consumer confidence will drive more consumer purchasing. Ultimately that is what I believe lies behind this.  
So with that frame in mind that is how I believe that the select committee should be looking at this piece of legislation. And when you are talking about principles I think the committee should be asking itself in the decisions that it is making whether if it is going to be good for consumers then it will be good for business. I think that is a good starting point to take.  
With that in mind I would like to mention a couple of pieces in the bill around the changes that are proposed. I would just like to refer back to what I think was Todd McClay’s point around the fact that consumer law reform was one of the 120 points of the Government’s economic plan. I have to say that is the first time I have heard that phrase and I was wondering to myself what the other 119 were and whether there was a list of them somewhere because that would be— 
Michael Woodhouse 
: Yes there are; they’re on the website. Go and have a look. 
CLARE CURRAN 
: There is? Good. On the website? 120 points? Good. I heartily agree that consumer law reform is a very important part of a wider economic plan and it was good to know that such an economic plan exists. Perhaps the fact that is has got 120 points in it is a reason why people have not really got their heads around what it actually all means. However one of those things is around as I have said closing those loopholes around allowing unscrupulous traders to get away with avoiding their obligations and having a responsible approach to the online environment. And I would just like to say that I would expect that the important and emerging new businesses that we have in New Zealand in that online environment—it would be good if we had more and perhaps consumer law reform might help drive confidence in that area around more businesses being developed—for example TradeMe which has been used today in the House as an example and other reputable organisations already take a responsible view on these things. But the traders that operate through TradeMe do not always and having those laws to prevent that kind of behaviour happening is good.  
I would just like to refer to Consumer New Zealand and the work it has done on this and its signalling this as a significant issue at least 2 years ago—more than 2 years ago—where it said that it believed that unscrupulous traders were exploiting a legal loophole in online auctions. And I would just like to make reference to that because I actually think that that is hopefully one of the things that this legislation will address. Just to explain exactly what that means for people—because no doubt there have been many of us who have gone on to TradeMe and made purchases—you may not know that if you are clicking on the “buy me” button then you are protected under consumer law but if you are pressing on the button that is called “starting bid” then you are not. That is an issue. I mean it is a simple issue and hopefully things like that will be addressed through this legislation and a lot more protection for consumers will be provided. So I think that is really important.  
And while we are talking about the importance of consumer confidence I would like to just quickly make mention of another issue which is not directly related to this legislation but hopefully will be addressed as part of the 120-point economic plan—that is the protection for consumers who are buying and likely to be buying a lot more of the products and services associated with ultra-fast broadband. I see that there is a new survey that has just been done about how people are more likely to take up products if they have got high video content attached to them. The questions I have are: how can they be reassured that they are paying a competitive price for those products and services and how can they be reassured that they are not going to be ripped off by monopoly pricing? Those are issues that really do need to be addressed and I hope the Government will be looking at them as well.  
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am pleased to stand and support the Consumer Law Reform Bill which is now before the House for its first reading. The previous speaker Clare Curran made mention of the different Ministers who have had input and I think what that shows to us is that the creation of law is quite a process when you consider the different Ministers the different officials the fact that we are debating it that it will go to a select committee that the general public will have a say and that different people in the sectors will be able to come in and make their own submissions. It shows what a robust process we actually have here in New Zealand. Of course today Mr Deputy Speaker you are presiding so congratulations on your reappointment as well.  
The Consumer Law Reform Bill is a bill called an omnibus bill which amends a number of Acts as we know: the Fair Trading Act the Consumer Guarantees Act the Weights and Measures Act the Carriage of Goods Act the Sale of Goods Act and the Secondhand Dealers and Pawnbrokers Act. It also repeals the Auctioneers Act 1928—that is going a long way back—and the Door to Door Sales Act 1967 the Layby Sales Act and the Unsolicited Goods and Services Act 1975. So there are a lot of Acts of Parliament that are being amended improved or updated and some repealed in this piece of legislation. In fact it has been 20 long years since this amount of work has been done and I think that is a considerable length of time.  
I watch quite frequently—and no doubt many others do—the programme on TV called  
Fair Go 
. I think for every New Zealander when it comes to transacting business parting with their hard-earned money or when they want to receive a good or a service the thing that they want to see is value for that money. They want a fair go. They want to know that what they have paid for and what they thought they were going to get they do get. And at times of course that is not the case which is why we have programmes like  
Fair Go 
 why we have legislation and why we have enforcement.  
It is important for this to bill to proceed and make good progress. So I look forward as a member of the Commerce Committee to being able to really get into the nitty-gritty of this. It is touching so many areas. I think this is a bill that is coming to the House in good time and we look forward to the progress that it shall make. Thank you. 
Dr RAJEN PRASAD (Labour) 
: 
 May I also seeing as it is my first time in taking a call this Parliament congratulate you Mr Deputy Speaker and your three colleagues—the Speaker and Assistant Speakers—on your re-appointment. May I also acknowledge those who have given their maiden speeches and say how much I enjoyed those; it always reminds you of when your turn came 3 years ago to give a maiden speech. So there is a lot of feeling on our part—those of us who are not that old meaning not too old to this Parliament—of knowing where you were. I really wish those who are yet to speak the best for their speeches which we will hear in the next week or so.  
I also wanted to congratulate the Minister of Consumer Affairs Mr Tremain on his first bill. We were in the gym together over lunch and I noticed he was looking forward to introducing his first bill and— 
Hon Gerry Brownlee 
: For how long? 
Dr RAJEN PRASAD 
: I beg your pardon? 
Hon Gerry Brownlee 
: For how long? 
Dr RAJEN PRASAD 
: For the full hour. I did not see you there Mr Brownlee. You know it is great—it makes the afternoon go a lot better in the House with a lot more energy. But Minister Tremain did enjoy himself. He was leaving as I was starting for the full hour indeed.  
I do want to acknowledge that I am new to consumer law so it was fascinating being asked to speak to this particular bill the Consumer Law Reform Bill and then reading all of the documents. But of course it does remind you that although one might be new to consumer law one is not a new consumer. So I am sure that many many times I have been ripped off as well but not known what one could have done about that. This bill brought those things to mind.  
But perhaps the one thing that it did make me realise was that the relationship between a consumer and a supplier of goods and services is a complex one. It is almost by definition an unequal relationship where often the supplier holds a stronger hand—often that is so; it might not be the case all the time—and consequently it is important to realise that it is a symbiotic relationship where progress can only be made by one with the participation of the other. Unless that happens progress is not made. So it is in the interests of suppliers of goods and services to maintain their competitive edge and to constantly redesign their modus operandi to maximise their return. It becomes then as I was saying a symbiotic relationship and both actors in the relationship are important. It has not often been the case but it is so here.  
Of course once we realise that we see that in advantaging one partner a number of allied professions have also developed to provide an edge for the suppliers of goods and services. Whether that is marketing or other marketing-related activities it is designed to give an edge to one side. Sometimes suppliers engage in practices that entrap innocent consumers while others give legitimate transactions. When people do this they give legitimate suppliers and honest suppliers a bad name.  
We were talking earlier in question time about loan sharks. Indeed when one follows the experiences of some who have gone through that process loan sharks come to mind as an example of where the relationship is totally unbalanced and I hope that this Parliament will do something about that. Sometimes those who are caught through these practices are vulnerable people and those are the ones whom many of us probably see in our out-of-Parliament offices. Clearly they have been taken advantage of by unscrupulous suppliers. Consequently as the system has got complex—and other speakers have talked about electronic purchase and what have you—it is important to modernise our laws to protect vulnerable people and at the same time enable legitimate transactions between parties to be conducted fairly and predictably. So this is what this bill sets about doing.  
Perhaps the most satisfying part of it is to realise that it is principles-based. It is a complex bill to get your head around because there are four Acts plus a new one that are being addressed through this particular omnibus bill. But certainly it should enable consumers to transact with good confidence protect suppliers and consumers from inappropriate market conduct and make it easier for those affected to access the provisions of the bill to get some redress—and the final one is to realign ourselves with Australia.  
But as I was saying the intentions are given effect in the purpose clause of the Fair Trading Act which is in clause 5 of this particular bill. The omnibus bill makes changes to as I said a significant number of provisions in the Fair Trading Act and clarifies the respective rights and obligations of those providing goods and services and those receiving goods and services.  
There are some provisions that were attractive to me because I could relate to them. This bill makes new provisions for sending and receiving unsolicited goods and services. I think the solution that is in this particular part of this bill is actually quite clever I believe and it might even be “elegant”. That word could be used in this sense.  
If somebody sends unsolicited goods to someone else then the receiver’s liabilities are reduced from 3 months to 10 working days. So if a person in trade sends goods that are unsolicited provided the receiver indicates the good is not accepted the receiver has no liability beyond those 10 days and has to indicate that. Of course that could be open for abuse; I do not know. What if you call on the ninth day to say it is not accepted and then the other party has 1 day to remove the good? But I am sure the select committee will follow this up.  
Additionally if the goods are not collected—and this is the elegant part—within 10 working days the good becomes an unconditional gift to the receiver. Well I wish people would send me rather expensive things unsolicited and after 10 days they become an unconditional gift to the receiver. So here the onus is shifting to the sender of goods and services. This is a good provision especially for vulnerable people who could be taken advantage of.  
The bill also adds some new provisions for particular goods being declared unsafe and other speakers have talked about that. That clause becomes important particularly today when so much of what we import is made somewhere else and often under different regulatory systems. When it comes to New Zealand that is another part that becomes important. Perhaps the advantage here is that a whole series of provisions are being addressed and I agree with Lianne Dalziel who said that the regulatory impact statement was very detailed and it does provide a very good way for the select committee to look at all of those things.  
There are some provisions here around contracts. The only bit that worried me a little bit and perhaps the select committee can look at that is that I noticed that the bill’s provisions require those things to be in plain English and easily understandable. But in a diversifying New Zealand where in Auckland there are now large numbers of people for whom English is not a first language will the provisions still be understood by those people? Some attention could be paid to see how those who are not familiar with even plain English can still be enabled to understand what the provisions are—so the select committee could be looking at that.  
Much has been said. We support this and we look forward to the discussions at select committee and further discussions when the bill is reported back. Thank you. 
Bill read a first time.  
Bill referred to the Commerce Committee.