Key John: Consumer Protection (Definitions of Goods and Services) Bill — Second Reading 
Key John: Consumer Protection (Definitions of Goods and Services) Bill — Second Reading 
[Volume:607;Page:4708] 
JOHN KEY (NZ National—Helensville) 
: 
 I rise on behalf of the National Party to support this bill and in particular the amendments contained that will alter the Consumer Guarantees Act. When the original Act was passed in 1993 it had pretty broad provisions. Unfortunately the definition failed to have clarity in a number of areas and this amendment bill attempts to clarify those. I want to spend my time this evening talking about what the bill does what the amendments are proposing to do and the benefits of that. However I want to spend some time at the end on flagging some concerns I have. While the intentions of the bill are good and while we will support it on reading the bill and not being part of the select committee I saw a few red flags and I want to alert the House to those. 
What does the bill do? It provides certainty about the scope of the Consumer Guarantees Act and in particular this is an omnibus bill that attempts to change legislation across a number of bills including the Fair Trading Act the Commerce Act and of course the Sale of Goods Act. In particular as the Minister outlined in her address to the House there are really two issues in terms of the definition of goods and the definition of services. I will touch just for a moment on the definition of goods. This bill will look to include definitions of amongst other things computer software electricity gas and water and in particular the definition of service will also move in those areas but looking at the suppliers. It will mean the definition of a supplier will include someone who does not have a direct contract with the consumer. That is quite an interesting point in the sense that the bill will be implying a contract on a consumer. 
Members will be aware that that has become somewhat more necessary as a function of the electricity reforms that took place where the supply of electricity moved from being a vertically integrated supply chain all the way through to having various pieces: obviously the generators the lines companies and the retailers. The current law is that a consumer will have a relationship with the retailer. If the retailer fails to deliver electricity because of a fault caused by the line company then the consumer will have no further redress. That is one of the things that the bill is attempting to deal with. 
Clause 7 as the Minister outlined allows the retailer to have specific contracts with the business community and to contract out with the business community in certain parts as does clause 9. 
I guess an issue where I start having concerns is that of how the law works. In practice the primary obligations covered by the definition of goods are those of acceptable quality and conformity to a description given. What is of acceptable quality may to a reasonable consumer have one definition for one person and one definition for another. Acceptable quality to a consumer cooking for a dinner party for 12 in the suburbs of Auckland when those people are about to turn up in half an hour the cooker is not working and therefore there will be a lack of food may be completely different from that for a consumer who is not in the house between the hours of 10 in the morning and 3 in the afternoon because he or she is out working hard as we would expect that person to be—not out somewhere on some jolly that he or she may find more enjoyable. 
At a reasonable time like 12 o’clock in the afternoon when not in the house a consumer may not consider a lack of electricity supply to be an issue. But as I said earlier if 12 people are turning up for dinner and the cooker is not working I can assure the House that a reasonable consumer under that condition would want an electricity supply. So there is considerable ambiguity contained in those clauses and I believe they will need some definition. 
One of the major concerns I have is the fact that reasonable consumers will have to read their documentation extremely carefully. It may be argued that they will take a different course of action from the action that they would otherwise take if this legislation were not passed. I ask members to allow me to expand my thought processes on that concern. Currently most consumers in the country take out insurance coverage for their fridge-freezer in the event that there is not continuity of electricity supply. I know that when I look in my freezer at nights I see tucked in there lots of things that I would like to insure on the basis of their being high-quality seafood and the like—from the wonderful electorate that I represent of Helensville—and I know that I have taken the precaution to have a guarantee of that through an insurance contract. This law by being passed will argue that that is not required because we will be able under the legislation to seek compensation and redress via amendments to this consumer protection legislation. 
That raises a number of issues. The first is the sheer logic of that. In other words the cost will now be passed to all consumers as opposed to the cost being passed to consumers who want to cover their positions. For example maybe I do not have a terribly large fridge-freezer in my house— 
Clayton Cosgrove 
: You could afford one. 
JOHN KEY 
: I would like to think I can afford one. But maybe I do not have a very large one because maybe I do not believe in frozen food. I enjoy the freshness of food. I enjoy food and the freshness of food so I am the type of consumer who tends to go down to Foodtown or the local supplier select the fruits of the sea and enjoy them fresh. But unfortunately as a result of this legislation I will be paying through my electricity bill for those people who do not value freshness in the same way I do. That is one of the things when I picked up the bill that just whacked me around the face. I started thinking: “Whoa!” 
Stephen Franks 
: People who cook in hangis are paying for the microwaves of others. 
JOHN KEY 
: That is right. We are supporting the bill because we supported it through the select committee. Now that I have had an opportunity to review it I am not completely sure of that but we are supporting it and supporting it for the rationale that it attempts to do the right thing. The spirit of the bill is in the right place. The heart is in the right place. I am very very confident that when National is back in Government in 2005 or earlier in a few months’ time if Labour cannot go a full term I am absolutely sure I will be banging the table—I am not quite sure what table I will be banging—arguing: “Let’s just pull out of the 2003 Consumer Protection (Definitions of Goods and Services) Bill and just have a look at that.” In particular they are some of the issues I have. 
I want to commend the select committee and of course the Minister for having the wisdom to delete telecommunications signals. I say that because again an interesting part of this legislation is the way it implies a contract with someone whom one does not have a formalised contract with. If I could just take a moment in the House I will discuss why it was very important that telecommunications signals were removed. I point out that there has been a change in the way that financial market instruments are traded in this country as there has been worldwide. The days of oral trading of stocks and shares via brokers in Queen Street have moved somewhat to Internet-based trading. As a former member of the largest sharebroking house in the world I can assure members that that move to Internet-based trading has taken hold and will be significantly greater as the years go by. Had telecommunications signals been left as part of this legislation the downstream effect of that would have been quite simply this— 
Stephen Franks 
: No they are still there. 
JOHN KEY 
: No I tell Mr Franks that I think they have been deleted. They have been struck out unanimously in Part 3. [ 
Interruption 
] Then it is of great concern to me because my concern with the legislation is that there is some ambiguity in it. Let us imagine for a moment that that provision is in there. I do not believe that it is but let us imagine that it is. Then my great concern is that a consumer trading on the Internet purchases a stock and then suddenly there is a telecommunications signal at the point at which that consumer hits the “buy” key. That communication is not transmitted and the consumer then suffers a loss because the stock goes up. Who will that consumer be looking to for redress? That was my understanding of why the provision had been deleted from the bill. I stand to be corrected but my understanding was that that was why the select committee deleted that provision. 
Anyway may I say that I do have pleasure in commending this legislation to the House for its Committee stage but I flag those concerns that I raised in my speech.