Wong Pansy: Consumer Credit Bill — First Reading 
Wong Pansy: Consumer Credit Bill — First Reading 
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PANSY WONG (NZ National) 
: 
 Judging by the statement made by the previous young member I would say that if the number of years it has been in force is a good reason to change the legislation the speech by the New Zealand First member Dail Jones now makes a lot more sense to me. I certainly think that the age of a piece of legislation is not a very good reason to change it. The Minister and all the members of the Labour Party still fail to convey to the public what they mean by this legislation replacing the Credit Contracts Act and the Hire Purchase Act with a modern framework. People who are still listening to the debate would ask what that means and what this new legislative framework is so let us explore that.  
The bill that we are examining sets out to achieve the following objectives: to promote an efficient credit market to provide for effective information disclosure to allow pricing flexibility to provide adequate incentives for compliance and to discourage oppressive conduct. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
PANSY WONG 
: Ni hao Mr Speaker. What a multicultural Parliament! It is sad that we are going to debate this bill. I challenge the next Labour speaker to stop reading from his or her prepared speech and once and for all explain to the public what Labour means by this bill. It is to provide a contemporary framework and replace the Credit Contracts Act and the Hire Purchase Act but I am still seeking the answer as to what the significant difference is between the Consumer Credit Bill and the Credit Contracts Act.  
Essentially the objectives of the Consumer Credit Bill are to encourage full disclosure to make sure that borrowers are well informed and to ensure that there is a competitive market for efficiency of operation. Let me read the objectives stated in the Credit Contracts Act which this current bill is supposed to replace. Those objectives are to—“(a) Prevent oppressive contracts and conduct; (b) Ensure that all the terms of a contract are disclosed to debtors before they become irrevocably committed to them; (c) Ensure that the cost of credit is disclosed on a uniform basis in order to prevent deception and encourage competition; and (d) Prevent misleading credit advertisements;” Therefore I fail to see what significant differences there are between the Credit Contracts Act and the Consumer Credit Bill. This particular bill falls into a “tidy mind” bureaucratic process that always underestimates the cost of enacting a piece of legislation. Every time Parliament introduces new legislation it introduces uncertainty into the lives of people. So many case laws have to be established for the public lenders and borrowers to understand or second-guess the meaning of a particular word in the legislation. Therefore I challenge the next Labour speaker to explain to us whether the benefit of introducing this so-called new bill significantly outweighs the cost of uncertainty.  
Let us examine it. Apparently one of the major differences in this bill is to exclude business transactions. That was capably pointed out by the ACT member—and even agreed to by the Green member who asked why a person would be treated differently if he or she needed a personal computer to run a business. If the money is borrowed on a personal basis it is covered by the Consumer Credit Bill but if that person chooses to say that he or she operates a small business suddenly the bill does not cover that. That is very strange. What happened to the Labour Government which always claims to be the champion of small business? Suddenly it is saying that it does not want to protect small business from the compliance-cost burden. The ACT party is seeking an amendment to include small businesses in the bill and the Green Party will support it. The challenge now lies with United Future which always campaigns on the grounds that it is for average hard-working small-business people.  
David Benson-Pope 
: Get a member of a major party! 
PANSY WONG 
: National thinks this is a bureaucratic piece of legislation. If David Benson-Pope ever has anything worthy to say I ask him to take a call. 
Dr the Hon Lockwood Smith 
: Failed schoolteacher! 
PANSY WONG 
: I do not want to insult schoolteachers—I respect schoolteachers except that one.  
The bill seeks to limit the manner in which interest can be charged but it continues to show a lack of understanding of borrowers. People who want to borrow money usually really need the money. Therefore all they are concerned about is whether they can afford the total cost. If borrowers appreciate the full cost of borrowing it is up to them to decide whether they can afford it. Full disclosure in itself is sufficient. We do not need this heavy-handed legislative measure to do that.  
I am still looking for a significant advantage in the Consumer Credit Bill that is not apparent in the Credit Contracts Act that it is supposed to replace. Maybe it is to do with the enforcement regime or the penalty regime. The Commerce Commission is the enforcement agent for the Consumer Credit Bill but members should look at the statutory damages—only $3000 or 5 percent of the credit limit. I hardly think that would deter anybody from flouting the intention of this legislation. The only provision I was looking forward to was one from the Minister of Commerce the Hon Lianne Dalziel who promised last year that she would toughen up this legislation to sort out the problem of so-called loan sharks. The only provision I can see that remotely relates to that issue is a requirement to restrict the daily interest that can be charged. But the problem with loan sharks is the lack of enforcement. Most victims of loan sharks are not going to report the crime. This legislation stipulates an enforcement agency to look at whether the interest regime has been infringed. If it has the police might take action. The only way the loan shark situation can be dealt with effectively is to increase the resources and commitment of enforcement officers. The police rather than the Commerce Commission should be the ones to take proactive action but they are usually more involved in organised crime.  
Last year the honourable Minister promised a lot but I do not see any more effective mechanisms in this bill for dealing with the very unsatisfactory loan shark situation. She needs to have a conversation with the Minister of Police but given that Minister’s performance in the leaky-building saga I doubt that he would see any problems or react to anything. After reading the bill page by page I fail to understand what enlightened contemporary wonderful framework has been put into place to replace the Credit Contracts Act and the Hire Purchase Act. As the magazine C 
onsumer 
 advocates we want to ensure that the public has a say in whether there is any point in passing this legislation. National will support this bill to the select committee but we will examine it and make sure that public submissions are listened to. In particular we believe that the compliance costs will be horrendous.