Hobbs Marian: Consumer Protection (Definitions of Goods and Services) Bill — Second Reading 
Hobbs Marian: Consumer Protection (Definitions of Goods and Services) Bill — Second Reading 
[Volume:607;Page:4706] 
Hon MARIAN HOBBS (Minister for the Environment) 
  
on behalf of the 
 Minister of Consumer Affairs 
: I move  
That the Consumer Protection (Definitions of Goods and Services) Bill be now read a second time 
. Since 1994 the Consumer Guarantees Act has been the main source of rights and remedies for consumers who have purchased products and services that are proven to be defective. The Act was meant to cover all goods and services ordinarily acquired in trade for personal and domestic purposes but in 1998 the High Court ruled that the Act did not apply to electricity or electricity line services. This bill will reverse that decision and erase all doubt that the Act applies to other utilities and to computer software. As a cornerstone of New Zealand consumer laws the Consumer Guarantees Act lays down some common-sense rules. Goods must be of acceptable quality services must be performed with reasonable care and skill and when things go wrong the supplier or manufacturer has an opportunity to put things right except in serious cases where the consumer can choose to reject the goods or cancel the contract and get a refund. 
This bill has three underlying purposes—firstly to ensure that the Consumer Guarantees Act applies to all products and services that are ordinarily supplied in trade for domestic consumer use now and into the future; secondly to ensure that the supplier in the supply chain who is best placed to manage the risk of product failure is liable to the end consumer for defects; and thirdly to ensure that New Zealand’s trade practices statutes are consistent with each other. 
The first purpose is achieved by expressly including those products about which doubt has been cast. These include electricity gas water and computer software as goods. They also include network supply functions for electricity gas telecommunications water and waste water removal services. The second purpose is achieved by amending the definition of supplier to clarify that the firm that supplies the service to the consumer is liable for failure to meet the minimum standard performance required by the Consumer Guarantees Act. However there are exceptions for contracts that involve business consumers so that the Act does not interfere with the integrity of business-to-business transactions. 
The third purpose is met by bringing into line the corresponding definitions of goods and services in the Commerce Act the Fair Trading Act and the Consumer Guarantees Act. I commend the members of the Commerce Committee for the sterling work they did in grappling with some very complex issues in connection with this bill. The committee heard many submissions and listened carefully. Most submissions supported the bill but many suggested amendments to make the bill more workable. The committee has recommended several changes that have improved the bill immeasurably. Once again I thank the committee for its good work. 
I would like to comment briefly on the main issues considered by the committee. The original bill included telecommunication signals in the definitions of the goods. Several submissions warned that this might expose Internet service providers and telecommunications companies to liability for the content of and accuracy of information on third-party websites. This would have been an undesirable and unintended outcome and I agree with the committee’s recommendation that telecommunications signals should be deleted from the definition. 
Several submissions urged the committee to delete electricity from the definition of goods. This would undermine the Consumer Guarantees Act purpose with regard to consumers’ redress. The Consumer Guarantees Act provides incentives for everyone in the chain of supply—manufacturers distributors and retailers—to stand behind the products and services they supply. If electricity were included as a good then the guarantee of acceptable quality would apply to electricity retailers and manufacturers. If electricity were included as a service only then the injured consumer would have to prove that the lines company was negligent before redress was available. This would leave most consumers without any remedy and it would remove the incentive for electricity companies to determine who has caused a particular fault. 
Defining goods to include electricity makes a lot of sense and it is not onerous for electricity suppliers. This is because the meaning of “acceptable quality” is based on what a reasonable consumer who is fully acquainted with the nature of the product would regard as acceptable. A reasonable consumer understands that electricity is supplied in real time is subject to momentary fluctuations and is prone to outages due to environmental or other hazards and periodic maintenance. 
A major concern of submitters was identifying who is a supplier of electricity for the purpose of the Act. The committee has formulated an amendment to make this easier. In practice electricity retailers will be responsible for supplying electricity that is of acceptable quality. Electricity lines companies will be responsible for supplying line function services with reasonable care and skill. They will not however be responsible for failures that result from the acts of third parties or events beyond human control where the supplier manages the risk of that occurrence with reasonable care and skill. 
The committee also heard submissions that that definition of goods should not include computer software. As the consumer receives a licence to use software it was argued that software should be regarded as a service rather than a good. Rightly I believe that the committee considered that the consumer receives an interest in software that is similar to other goods such as music CDs. Therefore it should not be regulated differently in terms of its quality and fitness for purpose. The guarantees and remedies that relate to goods are also more relevant and applicable to software than are the guarantees and remedies that relate to services. 
Several submitters asked for water to be removed from the definition of goods and the supply of water to be removed from the definition of services. The committee concluded that the bill should cover water. Currently there is doubt about whether all trade practices legislation covers water. Therefore as with computer software water and its associated supply services are included in the bill for the avoidance of doubt only. 
Another area where submitters raised some serious concerns was the suppliers’ ability to exclude liability to business customers in situations where they do not have a contract with them. The committee resolved this issue by giving a non-contracting supplier such as a lines company the benefit of any liability exclusions contained in the contract to supply such as between the retailer and business consumer. In conclusion I consider that the bill represents a significant development for consumer protection in New Zealand. I commend the bill to the House.