Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
Tisch Lindsay: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8720] 
LINDSAY TISCH (NZ National—Piako) 
: 
 I have a question for the Minister about clause 48 in particular which relates to consumer leases. Clause 48(1)(d)(i) and (ii) refers to the lessee having an option to purchase the goods. I want to question the Minister specifically in relation to leasing a car in a situation where at the end of the lease the person does not have the opportunity to purchase the vehicle. I have always operated leased vehicles so I can use that as a specific example. 
I have had an option to be able to buy a vehicle by putting some money down and having the lease spread over maybe 3 years. At the end of the 3 years there has been a residual value and at that time I could then buy the vehicle. That has been an option. The other option which I have always exercised has been to lease the vehicle just on a monthly payment basis which includes the lease per month plus GST. Then at the end of the period after I may have had the vehicle for 2 years and done 60000 kilometres or whatever the lease arrangement is I can then hand back the vehicle and drive out with a brand new car. I have had the option of choosing a vehicle that has a residual value or a vehicle that does not. Many people do that so maybe the Minister or her advisers can help me. In the situation that I am referring to does the circumstance arise whereby at the end of the lease period I will not have the option of buying the vehicle at the residual value? Is that covered by the bill? 
Clause 48(1)(d) states: “when the lease is entered into 1 or more of the following applies: (i) the term of the lease is for 1 year or more:”—that is fine; it is very clear—“(ii) the lessee has an option to purchase the goods.” The question is whether the lessee has the option to purchase the goods. That is what I am asking. I know that there are a number of individuals—business people—who fall into that category. I do not know from reading clause 48(1)(d)(ii) whether those people are covered specifically by that provision. 
Leasing is big business. A lot of my work before I came here to Parliament was in restructuring businesses. One of the things we did was to look at leasing as an option. We looked at leasing computers fax machines and Eftpos machines for example. Why would people want to spend $3000 on buying an Eftpos machine when they could lease one for about $65 a month? As technology has moved so quickly why would anyone want to have a depreciating asset when that person could lease it and claim the total cost back as a cost against the business or even lease it for personal use? There is also though with some of those lease arrangements the opportunity to purchase the equipment which takes us back once again to clause 48. I do not know whether that is covered by clause 48. 
I am asking the Minister a very simple question. The advisers could say yes or no just to that question; I would be comfortable with that. 
Hon Judith Tizard 
: Businesses aren’t. 
LINDSAY TISCH 
: OK. But a lot of individuals fall into that category; a lot of individuals lease vehicles. Why would people want to spend $30000 or $40000 on buying a car when they can lease one for $300 or $400? Even if they are not in business that is still a cheap option. Leasing is an optional way of funding one’s operation whether it be for personal or business use. We can look at a number of examples of that. Computers and fax machines fall into that category.It covers other equipment as well and a lot of the vehicles on the road today are not owned by the people who drive them. Leasing is an absolutely huge business. 
So the point I make to the Minister is this: if there is no residual value at the end of the lease period that gives me the opportunity to buy the item am I actually covered by clause 48? I am quite happy to sit down if the Minister can answer that question for me.