Clark David: Third Readings —Text is incorporated into the Bound VolumeClark David: Third Readings —[Sitting date: 10 December 2013. Volume:695;Page:15400. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): Labour will be supporting the third readings of this legislation arising from the Consumer Law Reform Bill. We are glad to see it passing and we are glad that it has finally made its way through the House.I want to take up a point that was raised by Mojo Mathers in her contribution. She said that it was logical that the onus of proof should sit with the company that is making claims to consumers. I agree with the contribution she made in that respect. I want to expand upon it a little and talk about the concept of rational ignorance because that is one of the principles that underlie those consumer protections. Economists use the term rational ignorance to refer to the advantage that lies in being a consumer who does not have to research every single aspect of every single product that is consumed.It is far more efficient for the consumer and for society as a whole when common-sense rules apply and a consumer can rely on what is called rational ignorance. That is ignorance that is entered into in a rational way knowing that it is an efficient way of going about things and that is a wider good for the economy. When a product is claimed by a company to do a certain thing—I guess at the extreme end it might be a pharmaceutical product that claims to provide a particular remedy—it should not be the responsibility of every citizen to necessarily go and test whether that product provides that remedy or not. There are extensive trials that are undertaken on most drugs that are available today and it would indeed be almost impossible for any ordinary citizen to carry out the kind of testing that might give them full consumer knowledge of the impacts of any particular given drug.So in one respect even where there are substantiated claims that are researched by an individual consumer it is only up to a certain point that the consumer can be expected to understand and learn about a product. Generally most of us go about our day-to-day business relying upon the claims that are made for products and effectively understanding and rightly expecting that they will be true. So it is good that this law that we are passing today strengthens those provisions and makes sure that consumers can trust that the claims that are made are in fact substantiated and correct and that they can go about their business in a most efficient way.It is the same of course as what happens with Governments. Consumers—or in this case voters—vote a party into Government based on the claims that it makes and they trust that the Government will get on with what it is supposed to do or what it has said it will do. It is right that voters should expect that to be the case. And in fact we see that when Governments of differentilks do not live up to the claims they make then they of course get voted out. That is the mechanism that applies in that circumstance. But often too in terms of policy development Governments do things that were not signalled in advance. An obvious example that springs to mind is the increase of GST by this Government. That was not signalled in advance; it was something that the Government did once it was elected. People tended to react badly to that because it was not a claim that was clear and transparent beforehand.Iain Lees-Galloway: They said something quite different.Dr DAVID CLARK: I am sure that that will have consequences in due course for the Government. People will lose faith in it. Indeed as my colleague points out National did say something quite different. John Key said that he would not put up GST but then did.Another example would be retirement savings policy. Most ordinary citizens do not research every single aspect of retirement savings. They generally trust that the Government will plan ahead for their future. They elect people to make decisions on their behalf and they expect that they will be able to get their superannuation one day. We know though—those of us who have looked into the area more thoroughly—that in fact that is not possible under current settings. That is why in the Labour Party we are looking to have a consideration of whether the retirement age should go up. We are looking to ensure that KiwiSaver becomes universal so that people actually have full retirement savings policies. We would resume of course funds going to the Cullen fund to make sure that there is a fund there that can support the kind of retirement that Kiwis expect otherwise further down the track the New Zealand consumers of politicians’ actions are going to be very disappointed with what has happened over the years.I think that as politicians we are elected to make substantiated claims to make defensible claims and to allow ordinary citizens to apply what economists call rational ignorance—a sense of trust in the decisions that we make trusting that we will make the right decisions upon their behalf. So that more general principle that we are approving and supporting in this legislation should I think also be applied to the broader decisions that politicians make. I am arguing in that particular instance that we should have more rational policy around superannuation because that is what the voters expect. They expect to be able to have a dignified retirement but the current settings do not allow for that.Coming back to the principles in this legislation I guess the other thing that we are frustrated about is the amount of time it took to pass through. This legislation was initiated in 2009—4 years ago—and it is only now coming to its final stage. The Government has seemed more intent on getting on with other things like selling off assets than getting on with putting consumer protections in place or indeed collecting tax. We have just learnt this week that $8 billion is the amount of outstanding tax which is twice the value of the Government’s asset sales programme. This Government has been slow to repair the Inland Revenue Department’s tax systems. The Inland Revenue Department itself is a department under pressure and we see the effects of that as ordinary New Zealanders begin to wonder whether the Government really has a fair attitude to collecting taxation.Again with the slow passage of this legislation consumers could be wondering whether the Government really has it as a priority to look after them—to look after the ordinary man and woman in the street and their interests—or whether it is far more interested in doing deals selling off assets building casinos off the back of problem gambling and bailing out corporates like Chorus or RioTinto and asking very little in return. This Government does seem to be distracted. It does seem to be increasingly arrogant as to the will of the voters who put it there and of course we on this side of the House are picking up a different mood. New Zealanders are frustrated at the widening inequality. Although we are pleased that this legislation will do some small things in terms of putting a little plug in the dyke it is growth in inequality that will continue unabated even with bits of legislation like this in train.I guess Consumer New Zealand could claim a victory out of this legislation. It put pressure together with the Labour Party to make sure that this legislation was expedited to minimise ongoing harm. It did get there in the end. It did get there in the end albeit on a very slow path that saw it go through its various stages from 2009 to being passed only now. Substantial changes were made at the Commerce Committee and so the select committee must be congratulated on its hard work along the way. There were a number of details that were amended: clarification of the prohibition ofunsubstantiated representations prohibition of the use of unfair terms in standard form consumer contracts the requirement that contracting out of any Consumer Guarantees Act provisions be fair and reasonable increasing maximum penalties for breaches of the Fair Trading Act enhanced enforcement powers for the Commerce Commission and the removal of changes relating the Carriage of Goods Act to name but a few.There was also a wait-and-see approach adopted to unconscionable conduct. My colleague Clayton Cosgrove drew a link between that and some of the accusations against John Banks. I will not explore them here but all in all the legislation seems to be a step in the right direction albeit a very slow and belated one. Thank you.