Fair Trading Amendment Bill (No 3) — Second Reading 
Fair Trading Amendment Bill (No 3) — Second Reading 
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Fair Trading Amendment Bill (No 3) 
Second Reading 
Hon JOHN TAMIHERE (Minister of Youth Affairs) 
 on behalf of the  
Minister of Consumer Affairs 
: I move  
That the Fair Trading Amendment Bill (No 3) be now read a second time 
. I thank the Commerce Committee for its thorough consideration of the bill. I also acknowledge the efforts of those who made submissions. The Fair Trading Act of 1986 is a key piece of consumer legislation designed to protect consumers from misleading and deceptive conduct and unfair practices by traders. It also provides for the disclosure of consumer information relating to the supply of goods and services and product safety standards to protect against unsafe products. 
This bill updates and strengthens the Fair Trading Act with a particular focus on its penalty and enforcement regime. The Act has been in force since 1987 and since then barriers to its effective enforcement have become increasingly evident. The fines imposed by the courts are too low to deter offending. In fact the fines are so low that many traders regard them as merely a cost of doing business. This is especially true of pyramid-selling schemes at least two of which have generated revenue exceeding $1 million. The maximum penalty—$30000 for an individual and $100000 for a company—does little to stop the promoters of these scams. Notably in the vast majority of cases the courts have imposed fines that are well below the maximum penalty level. Increasing the maximum fines will send a clear signal to the courts that the fines they are imposing are too low. 
Problems with the legislation however extend beyond the issue of fines. Procedural impediments have been preventing the Commerce Commission from seeking remedies available under the Act. The requirement for the Commerce Commission to give undertakings as to damages when seeking interim injunctions is a significant disincentive to the commission seeking a remedy that can have an immediate and positive impact for consumers. Corrective advertising orders are another remedy that is seldom sought by the commission as procedural requirements result in time delays that make those orders ineffective. 
The purpose of this bill is to strengthen fair trading law. There are four key measures designed to achieve that purpose. First the bill substantially increases general penalties and creates a much tougher penalty regime for pyramid-selling schemes. The pyramid-selling penalty regime includes a commercial gain penalty up to the value of the revenue obtained from the offending. This will enable the courts to wipe out the profits made by rogue individuals who mercilessly rip off ordinary Kiwis. Second it extends the Commerce Commission’s search power to enable it to enforce the new commercial gain penalty. It also introduces a new notice power that provides the commission with an alternative to the search power. That is a less intrusive power designed for use when seeking information from witnesses who are not hostile. Third the bill removes the procedural barriers that have prevented the commission from fully utilising corrective advertising orders and interim injunctions. It also reforms the limitation period within which the commission may take a prosecution. Fourth the bill updates the Act to reflect modern trading practices and modern variations on scams by amending the definition of pyramid-selling schemes and repealing the prohibition on trading stamp schemes. 
The committee heard several submissions opposing the removal of the requirement for the Commerce Commission to give undertakings as to damages when seeking interim injunctions. Some submitters were concerned that innocent traders would be left without a remedy if they suffered a loss as a result of the commission seeking such an order. The committee carefully considered that issue and decided that the judicial process provided adequate protection against the commission making unreasonable applications for interim injunctions. It was noted that the amendment provided consistency with an earlier amendment to the Commerce Act which exempts the Commerce Commission from giving undertakings as to damages when seeking interim injunctions under the Commerce Act. 
Another issue raised by submitters was the extension to the criminal limitation period. Those submitters were concerned that the amendment would extend liability indefinitely for some traders. The committee was satisfied that sufficient remedies were available through the courts to protect traders from stale claims. The criminal limitation period will now be consistent with the civil limitation period. 
I would like to thank all members of the select committee for the work they have put into this bill. It is a very timely bill that represents a worthy step towards improving the effectiveness of New Zealand’s core consumer legislation. I commend the bill to the House. 
BRENT CATCHPOLE (NZ First) 
: 
 The objective of this bill is to strengthen the Fair Trading Act. It particularly focuses on pyramid selling. Although pyramid-selling schemes are already illegal under the existing Fair Trading Act this bill extends the scope of the Act to incorporate newer forms of pyramid selling that have developed since the original Act was implemented—for example schemes where the participants buy or sell an investment opportunity and use agents provided by the scheme operators to recruit other participants on their behalf. Instead of finding the recruits themselves they ask the agents to do so. If we look around this House we find that one party here was recruited to find a particular agent and I am referring to Mr Rodney Hide who went to Fiji as an agent to recruit people for a pyramid-selling scheme that turned out to be a total scam. 
Stephen Franks 
: I raise a point of order Madam Speaker. I understand that that reference was to a matter on which there has been a personal explanation. It is against the Standing Orders to refer to the matter in a way that implies that there was some substance to it when there was none. 
Madam DEPUTY SPEAKER 
: The member is correct. There should be no further reference to the matter. There has been a personal explanation. 
BRENT CATCHPOLE 
: I must point out that this bill does not affect existing legitimate franchise operators. They continue to operate as they have done in the past. 
I would like to draw attention to clause 14 which deals with search powers. Under the current wording of section 47 of the Fair Trading Act the Commerce Commission can search to ascertain whether a person has or may have contravened the Act. This bill extends the Commerce Commission’s search powers under section 47 so that it may obtain a warrant to search for evidence demonstrating the nature or extent of any breach of the Act revenue obtained through the offending or other matters material to the seriousness of the breach. That is to assist the Commerce Commission in gathering evidence for the courts to consider in sentencing. We in New Zealand First have difficulty with that provision because the extension of powers of search amounts almost to harassment. The commission has an unfettered power to undertake a fishing expedition to search for evidence to endeavour to prove its cases. We feel that that is putting too much emphasis on the search process and giving it too much power. We have difficulty with that particular aspect so we ask that it be reviewed during the Committee stage and that change be considered. 
Noting those concerns New Zealand First supports in general the purpose of this bill and we are looking forward to debating it in the Committee stage. 
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
: 
 Along with John Tamihere and others on this side of the House I rise to support the bill. The essence of the bill is the introduction of a range of protective measures for consumers. One of the amendments updates the definition of pyramid selling to more accurately reflect the modern versions of those schemes. I have some interest as does Mr Tamihere in trying to advocate for New Zealanders who were victims of a particular scheme referred to by Mr Catchpole—the Investors International pyramid-selling scheme. Members will recall from before the last election that a member of this House—I do not infringe on the member’s personal explanation—attended a conference the purpose of which was to promote a pyramid-selling scheme. That member then spoke at that conference and the result of the conference itself was that many New Zealanders lost millions and millions of dollars. 
Darren Hughes 
: Who was it? 
CLAYTON COSGROVE 
: My colleague asks who the member was who spoke at that conference of Investors International in Fiji. It was one Rodney Hide and that is not a challenge. 
Deborah Coddington 
: I raise a point of order Madam Speaker. As has already been pointed out Rodney Hide made a personal explanation to the House and under the Standing Orders that cannot be debated further. I ask you to bring the member back to the bill. 
CLAYTON COSGROVE 
: Speaking to the point of order I point out that it has been ruled in a previous ruling that one can question the judgment of a member but not his word. I am not challenging the member’s personal explanation. I did not say that he promoted a scheme. I am simply relaying the fact—which does not challenge his explanation—that he attended and spoke at that conference. I put it to you that that is perfectly in order. It is a matter of public record. 
Madam DEPUTY SPEAKER 
: Yes the member is correct as long as there is no implication whatsoever—as there was in the previous reference—of anything to do with the explanation that the member subsequently made. 
CLAYTON COSGROVE 
: I would never challenge Mr Hide’s judgment—Mr Hide of course being the only honest man in Parliament. 
Hon Chris Carter 
: What happened at Waiheke? 
CLAYTON COSGROVE 
: We will not get into Waiheke and that sort of stuff. But I am sure Mr Hide will want to take a call—being an expert in those sorts of matters and the only trained economist in Parliament who would be able to identify a pyramid scheme from a million miles away and therefore choose not to participate in one. 
I want to take this opportunity to put to Mr Hide again the question why when he came back from speaking at that conference the great scam-buster—by his own admission the only trained economist here—did not stand up to defend and try to assist the many New Zealanders who lost millions of dollars as a result of that Investors International scheme. It has been over a year and to this day Mr Hide has never explained his silence. What has he got to “hide” if the House will excuse the pun? I would have thought the great scam-buster would be itching would be running—or at least rolling or crawling—to try to bust the scam and defend and protect the many New Zealanders who lost hundreds of millions of dollars. 
I applaud this bill because it will shut down that sort of activity or go some way at least towards protecting those Kiwis who to this day have been given no protection at all by Mr Hide. The great scam-buster the great defender of the faith and the taxpayer has never to this day stood up and explained how he got involved and why he will not defend ordinary Kiwis. 
Sitting suspended from 6 p.m. to 7 p.m. 
CLAYTON COSGROVE 
: Prior to the dinner break I was speaking about two things. I was speaking about the nature of the bill and how it provides protections for our consumers through a variety of measures but especially in relation to shonky disreputable and grotesque investment schemes like pyramid schemes. I was also talking about the rorts that this bill will protect consumers from. 
As I said before the dinner break I have some experience as does my colleague Mr Tamihere in advocating for the victims of such schemes—those in New Zealand whom the  
Consumer 
 magazine identified as having lost millions of dollars as a result of schemes like those run by Investors International. It was a disreputable and shonky investment scheme run out of Fiji by a convicted felon Rudolf van Lin. It was that organisation that invited one Rodney Hide of the ACT party to speak at that conference. He did speak at the conference and they paid for his airfares accommodation food drink and so on—as he has acknowledged. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: Let us not go into that. The member can mention that he went there and can criticise the fact of his going there but there is to be no detail please. 
CLAYTON COSGROVE 
: Thank you Mr Assistant Speaker. I do mention that he went there and I do criticise him for going there. 
What I am pleased about is that this bill will provide substantial protection against those shonky schemes. I am also interested in an amendment that extends the definition to include schemes that for many participants primarily involves an opportunity to buy or sell an investment opportunity—whether personally or through an agent—rather than an opportunity to buy or supply goods or services. The agency issue is very very important. I think that this bill will cater very well for a case where a person acts as an agent and actively promotes a shonky scheme. This bill will hammer that person and rightly so. I have seen the financial carnage of families ripped apart by schemes that this bill seeks to put the boot into. Disreputable agents have misrepresented the so-called investment position to those people. They have said that families and other people can invest a small amount of money and get a huge return. The organisers have got experts—economists and others—to lend credibility to those schemes by for instance participating as speakers at conferences. 
I finish by repeating my request to Mr Hide and I make it in all sincerity: he has some expertise and in respect of this legislation can help victims of those schemes. I invite him as I did 8 months ago to come forward and talk about his experiences. I invite the great scam-buster to tell us why he has never at any stage explained why he did not assist those New Zealanders who lost money by breaking the scam—the conference that he attended—and trying to protect Kiwis from investing. As members of Parliament we have a duty and a huge opportunity. We have the ability to broadcast to New Zealand and use our profile to protect ordinary Kiwis. I ask why the scam-buster—the great man the trained economist who would recognise a scam as he would recognise a side of mutton—did not do his duty and do that. I commend the bill to the House. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to support the Fair Trading Amendment Bill (No 3). This bill aims to strengthen the Fair Trading Act by making amendments to enforcement and procedural provisions and in particular as we have heard by creating a new additional penalty regime for pyramid-selling schemes based on commercial gain from the scheme. 
Specifically the bill doubles existing maximum fines under the Act—currently $30000 for an individual and $100000 for a company. They have been raised to $60000 for an individual and $200000 for a company. The bill also amends the definition of pyramid-selling schemes in the Act to take into account newer types of schemes. These schemes may involve participants buying or selling an investment opportunity and using an agent provided by the scheme operators to recruit other participants on their behalf instead of trying to recruit new participants themselves. 
The bill also extends the search powers of the Commerce Commission so that the commission may obtain a warrant to search for evidence to demonstrate the nature and extent of a breach of the Act revenue obtained through offending or other matters material to the seriousness of the breach. That will assist the commission in gathering evidence for courts to consider in sentencing. In particular it will help to implement the commercial gain penalty for pyramid-selling schemes. The bill also introduces a new power that will allow the Commerce Commission to issue notices requiring people to supply information or documents. This power will give the commission more flexibility and is most likely to be used when the commission seeks information from witnesses who are not hostile. 
The bill also amends the Fair Trading Act to provide that the criminal limitation period runs 3 years from the date a breach is discovered or ought reasonably to have been discovered. That is being done because in some markets such as building investment products insurance and long-term guarantees consumers or the Commerce Commission are unlikely to discover a breach until well after 3 years from the date the breach occurs. 
United Future sees this legislation as mainly technical in nature and does not believe it to be controversial. Therefore we are happy to support it going to the Committee stage. 
JOHN KEY (NZ National—Helensville) 
: 
 National supports this legislation. As other speakers before me have outlined in large part the bill looks to include the acts of pyramid schemes within the legislation and to apply increased penalties to those acts. 
I want to talk for a moment about pyramid schemes in New Zealand. Pyramid schemes arise in a lot of different forms. One of the forms in which one often sees a pyramid scheme operating is a chain letter. Chain letters are a common form of a pyramid scheme. Often they start in a very innocent form. I fondly remember in my time at school when chain letters went around. I imagine that in my case they were probably love letters but that in the case of many other people they were other letters. There were numerous young ladies—[ 
Interruption 
] In fact an infinite supply of young ladies did write back to me and talk to me about the physical attributes I had—my good looks—and my charm. That was certainly my first introduction to such letters and I would hate to think that the Fair Trading Amendment Bill (No 3) was looking to close down that kind of activity because I found it quite enjoyable. 
But on a more serious note chain letters are an example of pyramid schemes. One of the reasons that we must pass this bill and close down pyramid schemes is the fact that they are doomed to fail. As someone who has been involved in the financial markets for all of my life I have always looked to supply financial instruments and investments for people that are fair and that give them a great opportunity to prosper in their retirement in the years when they most need that income. One of the major issues with pyramid schemes is that they are simply doomed to fail. They must fail because they do not rely on the sale of a good or service; they rely on more members joining up. Fundamentally there is a finite number of people in New Zealand. We saw in the last census that there were 3.95 million New Zealanders—about 40000 Kiwis short of being over the 4 million mark. Therefore eventually irrespective of how big or broad the pyramid scheme is or whether it takes the form of a chain letter or whether it is sold by an agent or a scheme fundamentally it must collapse. An investment scheme that is doomed to failure is an investment scheme that simply must be stopped. National strongly stands for the Fair Trading Amendment Bill (No 3) to protect New Zealanders who are asked to invest in schemes that are doomed to fail. 
I draw the attention of the House to the fines in this legislation. The original law applies a maximum fine of $30000 for an individual and $100000 for a company. The bill proposes to increase that to $60000 for an individual $200000 for a company but $200000 for a pyramid-selling scheme. One of the very important reasons that National and other members of the House fully support this bill is that when a fine is under the amount proposed in this legislation—under that $200000 limit—pyramid-selling schemes may be undertaken by members of the community who know that they will eventually be closed down and fined that eventually it is a zero-sum game that there are not an infinite number of members. Fundamentally they will become involved in these things knowing that they may well pay a fine but the fine is not large enough to deter them because they will make money even once they have paid the fine. 
Last week I had in my office a member of the community who had been duped by a pyramid-selling scheme. Without going into the gory details of it this member of the community in my Helensville electorate had had a farm had invested in a scheme and had lost in the order of $1.65 million. I felt a great degree of sympathy for him because although on the face of things one can always argue that sometimes people do something a little silly this member of the public—one of my constituents—was really someone who had innocently gone into something and had been conned by a scheme like this. It was one of those situations where the amount was rather exponential in how it went. The upshot of it is that this member of the public one of my constituents has now lost his farm and I have great sympathy for him. We have great support for this legislation in what it attempts to do. 
I want to talk a little bit about section 47. It applies the search warrant powers and the ability to search for information. Again the nature of a lot of these schemes is really complex. On the face of things they look quite probable and the investment often looks quite low but there are lots and lots of reasons that people are tied into these schemes. Because of their very very complex nature I think giving the commission the power to have extended search capabilities which section 47 does is to be applauded. It will allow these schemes to be investigated further and to be looked at for quite some time. 
New Zealand unfortunately does have a history of some schemes affecting quite a number of the community. I often ask someone from the financial markets why people are fooled by these schemes and what legislation could be passed to help protect those people. The answer is that we can only go so far in our legislation in terms of providing a deterrent in the form of the penalties that are proposed in this legislation as I outlined earlier—an increase of the fine of $30000 for an individual up to $60000 and of the fine of $100000 for a company up to $200000; and a fine of $200000 for someone involved in a pyramid scheme. That is a very good starting point. One of the things we can do is pass legislation like this which will help give enforcement and infringement notification. 
But it is incumbent on members of the financial services community as well if they ever see these schemes to the extent that they are financial advisers to look at and comment on these schemes. Also people have the opportunity when these schemes are exposed to bring them to the attention of the public either via the terms of this bill or via the Commerce Commission. In describing one of the most important ways to close down these pyramid schemes the analogy I give is Internet viruses which we see on our computers these days. Members of the House will know that when there is a virus of some sort very often what happens is an email goes around the community and advises people about what is happening. The other day I received an email with a teddy bear icon. It was not one of those love letters dating back from the time when I was at Burnside High School from someone who had been affectionate to me at that time; no it was an Internet virus of some sort. In terms of pyramid schemes forearmed is forewarned. That is very very important. All members of the community have a responsibility to bring these schemes to the attention of the public and to the attention of the Commerce Commission. Under section 47 they can investigate these matters and can highlight them to members of the public. 
Although some of us have had training in the financial markets and have had an opportunity to study these things many people have not. These schemes prey on people who have not had the opportunity to make a full study of these things. Very often they are people who can least afford to lose money and can least afford to have their families afflicted by these schemes. 
National supports the Fair Trading Amendment Bill (No 3). We look forward to this bill becoming legislation that protects New Zealanders who would be preyed on by those who would promote pyramid schemes in a manner that is to their detriment. As I said earlier before I came to the House I looked at relevant legislation in other jurisdictions. I can tell members that if they do a search of the Internet on what is happening in Australia and the United Kingdom they will find as I did—and I printed it out—very similar legislation from the Department of Trade and Industry in the United Kingdom that promotes exactly what is happening in this bill. It has some very good pointers in terms of citizens advice and where members can have legislation. On that note I commend this legislation to the House. 
STEPHEN FRANKS (ACT NZ) 
: 
 There are some parts of this bill that make sense—the abolition of the prohibition on trading stamps for example. That was a fairly embarrassing provision. It treated New Zealanders as being more gullible more credulous and more foolish than almost everyone else in the world where trading stamp schemes were permitted. New Zealanders were thought to be incapable of understanding them. 
There is some upgrading of the penalties but it is not done in a very intelligent way. It could have been done by looking at the gains that people make and determining the penalty by a multiplier of the gain or by in some other way relating the penalty to the difficulty and cost of getting a conviction. For example it would be recognised that many of these things will come to light only if there is a whistle hunter or a bounty blower—sorry a whistle-blower or a bounty hunter. [ 
Interruption 
] Those members like the “blower bounty”. If the penalties had been looked at in terms of getting the right incentives to chase and catch people who were breaking a law that is not easy to enforce then the penalties would have been related to making sure that enforcement was worthwhile. 
Clause 10 is of much more dubious value. It exempts the Commerce Commission from having to take account of the damage it might do by granting an injunction lightly. That really puts into the hands of a regulator a power that could destroy a business. Elsewhere the commission has exemptions from liability. At present the court is able to take into account and balance the risk and the cost and to require an undertaking as to damages. This measure is without any proper reasoning. ACT believes that there should always be a balance and that people should certainly not be exposed to the arbitrary power of State agents. The power to search is unexceptionable. 
I want to come back to a provision that Mr John Key just made a key point of his address. Before that a member whose name I always forget but whom I think of as the “beagle boy”—the member from Christchurch Mr Clayton Cosgrove—focused his address on an alleged improvement to the law about pyramid selling. There is only one change in that provision. It adds the words “whether personally or through an agent” to an existing provision on pyramid sales. 
That provision is entirely redundant. Section 45 of the Fair Trading Act already covers actions by or through an agent. It states: “(4) Any conduct engaged in on behalf of a person other than a body corporate—(a) By a servant or agent of the person acting within the scope of that person’s actual or apparent authority; or (b) …with the consent or agreement (express or implied) of a servant or agent … shall be deemed for the purposes of this Act to have been engaged in also by the first-mentioned person.” In other words the change to the pyramid selling scheme provisions has absolutely no purpose and does absolutely nothing. 
We have just heard about 25 minutes of complete and despicable drivel from people who have no idea about what this bill can do and no idea about pyramid selling. It was kicked off by a man who when he was the chair of the committee on which I sat that first opened an investigation into prime bank schemes wasted the time of the Securities Commission and the Commerce Commission. Mr Clayton Cosgrove as chair of that committee invited those commissions along to give submissions on fraud and on schemes that financially defraud consumers. Those poor bodies thought that that was a genuine request. They sent along people whose time was valuable and they prepared pages and pages of submissions on what they wanted to see by way of improvement in the law to protect people from fraud. I happened to attend a meeting of the committee on the day those people turned up and I could see their utter bewilderment— 
Mark Peck 
: That has nothing to do with the bill. 
STEPHEN FRANKS 
: It has everything to do with the bill because the origin of that alleged change to pyramid-selling schemes— 
Mark Peck 
: It hadn’t even been reported to the House. 
STEPHEN FRANKS 
: That happened at another committee I say to Mr Peck but it has everything to do with this bill. Those bodies made the submissions that they were called upon to make to that committee and they carefully explained to Mr Clayton Cosgrove who has made such a feature of pyramid selling in this legislation that this law has absolutely nothing to do with pyramid selling. 
Hon Pete Hodgson 
: Is there anything to do with privilege? You are not in any trouble with privilege now. 
STEPHEN FRANKS 
: I say to Mr Hodgson that I have no idea about that. If Mr Hodgson wants to suppress the account of this matter by alleging privilege he should go ahead. 
Hon Pete Hodgson 
: I just brought it to your attention that you shouldn’t be cavalier with the rules of the House. 
STEPHEN FRANKS 
: This committee which had the Commerce Commission and the Securities Commission in front of it had a series of interrogations on a subject matter that had absolutely nothing to do with the question that was put to those bodies. 
Those interrogations were very very similar to the wild allegations just made by members who spoke in this debate earlier. They purported to inquire about commercial fraud prime bank paper and all the kinds of schemes that I knew about because I was on the Securities Commission and we put earnest effort into trying to stop them. The language used was precisely the language that Mr Clayton Cosgrove has just used in relation to the amendments to section 24(2)(a) inserted by clause 5. He made a disgrace of this House. He embarrassed anyone of integrity who sat on that committee by totally baffling the witnesses and he did the same tonight when he spoke on clause 5. 
Mr Cosgrove addressed no element that is in this bill at all. He did not address any of the hard questions such as the distinction between franchises and pyramid schemes. He did not bother to consider the comparison between Lotto Telebingo and the other State-subsidised-and-promoted gambling schemes that cause a guaranteed loss to those who participate in them. He did not try to compare anything that the select committee stated it was doing in that area with what the Government is actually doing in other areas—areas in which it regards punishment and penalties as not working. The Government is embarrassed that it sets up fines that it does not bother to collect. If this bill had a provision that allowed for effective enforcement of fines—and indeed if the enforcement of fines had been seen as a topic on its own—we might not have $427 million of uncollected fines in a blowout from $325-odd million over the term of this Government. 
Mr Cosgrove’s ranting— 
Sue Kedgley 
: Ranting. 
STEPHEN FRANKS 
: Is that how one pronounces it? I do not want to sound Australian. 
The ranting on pyramid-selling schemes had nothing to do with any effective amendment to the Fair Trading Act. The Act itself suffers from the same enforcement difficulties that all our law suffers from. The people who can look menacing who are prepared to hide and who do not worry about the bailiff or fines will not suffer. Whether people get a $60000 or a $30000 fine will make a real difference only to those people who are honest who have their assets in their own name who probably did not intend to commit an offence and who have been caught up in a law that they did not understand. The “shrewdies” will not have their assets available to be seized under this bill; they will not even have to go to the bother of defending themselves. The “shrewdies” will not have records that the Commerce Commission can go out to requisition and search. 
Hon Harry Duynhoven 
: Why didn’t you back my inquiry into motor vehicle dealers? 
STEPHEN FRANKS 
: There should be the same principle across all this law. If we want to have proper enforcement of our law we should focus on enforcement not on political slogans or on the completely empty exercise of ranting about non-existent or possibly existing fraud schemes that had no involvement from anyone who will ever respond to any kind of order in this bill. 
MARK PECK (NZ Labour—Invercargill) 
: 
 One can always tell when one touches a raw nerve because people stand up and say nothing about a bill at all. I do not intend to speak for terribly long about this bill. I simply remind the member who preceded me that the Commerce Committee dealt with this legislation. It had five submissions on the bill and took 30 minutes to hear the submissions. There was no opposition to the bill at all and it was reported back to the House unanimously. The bill does four things: it amends the definition of pyramid selling it increases the penalties for pyramid selling—there was a previous ACT party member who knew quite a bit about pyramid selling; that person is no longer in Parliament but there it is—it extends the search warrant powers of the Commerce Commission and finally it changes the time for bringing criminal proceedings. This is a good bill and I support it. 
SUE KEDGLEY (Green) 
: 
 The Green Party will be supporting this bill. We regard it as a fairly narrowly focused and modest bill but we will support it nevertheless. The bill seems to focus on pyramid-selling schemes. I am not sure whether they are a huge problem in the land—in the scheme of things are they an enormous problem? But the bill focuses on them. I think the bill is perfectly reasonable. It increases penalties and so forth and I say so far so good. 
Mr Anderton said in introducing the bill that the Government will be taking a tough line to deter people from misleading consumers about the money they can make from pyramid schemes and so on and so forth. All I would say is that it is well and good that the Government is to focus on taking tougher action to deter people from misleading consumers about the money to be made from pyramid schemes but what about all the other issues where consumers are being misled many of which I would regard as potentially more significant? This legislation gave us an opportunity to really examine the Fair Trading Act a very significant Act that is woefully weak and lacking in powers in many areas. We had an opportunity to really look at and examine that Act and to strengthen it but what did we do? We just focused on pyramid-selling schemes. In that respect we have missed an opportunity here. 
As a result the bill is more significant for what is not in it than for what is. For example one area in which we might have liked to see a strengthening in the bill concerns the consumer’s right to know. In many jurisdictions overseas consumers have a recognised legal right to know what is in a product they have purchased for example and where it comes from. That would have been a wonderful right to enshrine in a bill that amends the Fair Trading Act. But no we have just focused on pyramid-selling schemes. The basic right to know what is in a product we purchase and where it comes from is extremely important but according to our officials it does not exist in law. Therefore this would have been an opportunity to enshrine that. 
The other point is that when the Minister of Consumer Affairs talked about the bill she said that we need to ensure that consumers have the information they need to make informed choices and we need to protect them from exploitation etc. It is extraordinary that for example if one walks around a supermarket one would find dozens and dozens or perhaps hundreds of examples of goods that are misleadingly or deceptively labelled and that absolutely nothing is done about that. This bill would have been an opportunity to enshrine that consumer right to know and to look at issues such as how to strengthen the provisions in the legislation to protect consumers from misleading and deceptive behaviour. 
Equally extraordinary from my point of view is that the Minister of Consumer Affairs and indeed the entire Government are actively opposing the fundamental right of consumers to know where their food comes from. We have the extraordinary spectacle that our Government will be in Australia on Friday vehemently opposing the right of consumers to know where their food comes from. It is called country of origin labelling. Similarly in the international Codex Alimentarius forum that decides on international standards New Zealand has taken the most vehement stand of any country in the world in opposing the right of consumers to know what country their food comes from. It seems quite extraordinary that on the one hand we are fretting about pyramid-selling schemes and focusing on the protection of the consumer in that particular area and on the other hand we are busily undermining the right of consumers to have even such a fundamental right as to know where their food comes from. 
It does seem to me to be quite bizarre and extraordinary that even the Ministry of Consumer Affairs which is supposed to be all about protecting consumers from misleading and deceptive behaviour opposes our basic right to know where our food comes from—the basic country of origin labelling. So the Government is at international forums—at the Codex Alimentarius Commission—and in Australia arguing that the Australians should get rid of their mandatory country of origin labelling and that consumers have no right to know where their food comes from. Then the Government makes a great big deal about a small amendment to the Fair Trading Act concerning pyramid selling. 
If we are to be concerned about strengthening the bill protecting consumers and the whole issue of deceptive and misleading conduct let us apply that across the board. Let the Government be consistent and not undermine that right in some areas while in other areas suggesting that it is taking some great action to strengthen the legislation. It is extraordinary that if we wander around a supermarket and look at meat for example—and 40000 tonnes of meat is imported into New Zealand—we would not see one single label in any supermarket in the land to indicate where that meat comes from. It comes from places like the People’s Republic of China Australia South Korea America and so forth. Surely in this era of mad cow disease etc. we have a legitimate right to know where our meat comes from. That is simple. 
What about fish? We import hundreds of thousands of tonnes of fish. We import shrimps from places in South-east Asia where they use antibiotics routinely in fish farming etc. Surely we should have a basic right to know where that food comes from not only because of our concerns about health and safety but also because we may prefer to support and purchase products from New Zealand. I would argue that when the vast majority of New Zealanders go into a supermarket they fondly imagine that they are buying New Zealand meat and they do not realise that is really a bit of a lottery and a lot of the meat comes from overseas countries. They have no idea of that and to me that is misleading and deceptive. 
We are told that this bill will strengthen the whole Fair Trading Act so why did we not focus on issues that are of fundamental concern to the people of New Zealand? This bill is a wasted opportunity. We will support the bill in the narrow little areas that it concentrates on but frankly it is woefully inadequate does not go nearly far enough and is very much a missed opportunity. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 I shall make a brief contribution because this is a good bill. It is in the interests of the New Zealand community. One of the best things we can do is to assist its rapid passage through the House. 
JOHN CARTER (NZ National—Northland) 
: 
 In response to Sue Kedgley’s contribution I must say thank goodness we do not have any mad cows in the House! Her contribution lead to that comment. 
I am taking this call for a couple of reasons. The first is that one of my colleagues came to me—actually he was talking about the next bill if I can digress for just a minute—and asked whether it would be all right if he spoke immediately after the Minister. I said that I was sure we could arrange that with the consent of my colleague Judith Collins. The member said the reason was that he was on the committee and he needed to speak on the bill so I thought it was not an unreasonable request. But then he threw in that Doug Woolerton was having a shout and he wanted to get to it. I thought that was fair enough and we would let him have the call first but I will now take 10 minutes to delay him for a fair while before he can get to his drinks! 
That is the first reason. The second reason I am speaking is that we are in urgency and I have to fill in 10 minutes because the bloke who should be speaking is not. Unfortunately here we go again team; we will have to hang on. Actually I will not take 10 minutes for this reason. 
Mark Peck 
: Your mum’s going to be very disappointed. 
JOHN CARTER 
: No my mother has never been disappointed in any of her sons at all I can tell the member. Her sons are the best things ever from my mother’s perspective. 
Mark Peck 
: What does your mum think? 
JOHN CARTER 
: I have not got to anything yet so I cannot tell the member what my mum thinks. But if he is patient I shall get round to it. Members should just be patient. 
Mark Peck 
: Pyramid selling? 
JOHN CARTER 
: No I must confess that pyramid selling is one thing my dear old mum has never been involved in bless her heart. 
Tonight I want to talk about the issue of powers of search. One of the previous speakers—I cannot think who it was—said that the bill had been passed unanimously by the Commerce Committee. I draw the House’s attention to the fact that New Zealand First did not support the provision with regard to the search powers. I would have thought that in view of that members of New Zealand First might take a call to explain why that was so. Then I realised that they could not because of an invitation to an event that is outstanding that its members have to rush to. 
I make the point that the Commerce Committee has done something with regard to the search powers that is useful. I have no concern myself about our giving authorities the power to make sure that the law is properly enacted. If they think somebody is breaking the law and there is a need for information to allow them to advise the courts that some error has been made or somebody has broken the law then they should have the right to do so. However one thing that I think is important—and this is a quite specific point—is that the committee has changed the way in which the bill is written so that when people apply to the court the purpose is not just to get a search warrant but also to advise the courts why the search is necessary. 
I think that is very good because it is very easy to go along to a court and say: “Can we have a search warrant? We think this is happening.” The Commerce Committee has made a very good change. People cannot only apply for a search warrant; they have to advise why they believe there is justification for their application. That is a good step forward because when we give authorities this power as we in Parliament do we should also be happy that they have gathered the right information on which to grant those applications. So I draw the House’s attention to that. That was a sensible thing for the select committee to put in the bill to change it from the way in which it was first drafted. As a consequence the committee has improved the bill. 
As I say I am surprised that we have not had a contribution from New Zealand First on the bill given that its members do not support this provision. I would like to know why. It may be that my friend and colleague Mr Jim Peters will advise us but then again he may not because his friend Brian Donnelly might be upset that he was taking more time of the House. 
So with that contribution I will resume my seat and commend this bill to the House. The National Party supports the bill as I know my mum will and we should get on with the next business. 
Bill read a second time.