Mathers Mojo: Consumer Law Reform Bill — Second Reading 
Text is incorporated into the Bound Volume 
Mathers Mojo: Consumer Law Reform Bill — Second Reading 
[Sitting date: 11 December 2012. Volume:686;Page:7417. Text is incorporated into the Bound Volume.] 
MOJO MATHERS (Green) 
: 
 The Green Party is pleased to be supporting the Consumer Law Reform Bill. We are supporting this bill because it proposes the most significant changes to consumer law in the last 20 years because it includes protection for consumers and because it provides for more effective enforcement of these laws. We all know someone who has been ripped off or exploited in some way to buy a product they did not need or a service under pressure who was quoted a misleading price or who was sold a product that did not perform as expected. This bill will help address and close some of the more significant gaps and loopholes. 
I would like to mention here—the previous speaker the Hon Clayton Cosgrove notwithstanding—that I was impressed with the level of engagement by the Commerce Committee members who seemed to put political differences aside and work for the best possible outcome. I also want to acknowledge the very high-quality advice that we received from the Ministry of Business Innovation and Employment which seemed to be able to produce a swathe of experts on a whole range of issues from consumer goods to auctions and from unfair contracts to third-party payment. The submission process was very interesting as there were very few submissions from individuals. The bulk of submissions were from businesses energy companies retailers and the like as well as from community and consumer groups and I feel that this reflects in part the very complex and detailed nature of this bill. 
We are very pleased that the bill makes it explicit that the Consumer Guarantees Act applies to internet sale sites and requires all traders selling goods and services to consumers on internet sites to identify themselves as such. The Green Party is also particularly pleased that the bill significantly expands the powers of the Commerce Commission which will enable it to be more effective in carrying out its work. 
The committee has recommended compulsory interview powers for the Commerce Commission. We strongly support this move as these powers are needed to assist the commission in obtaining documents and information that will allow it to properly investigate a company in a timely and cost-effective way. Some people had raised concerns that these powers may be too heavy-handed. We are satisfied that the safeguards proposed in the bill are adequate in that the powers will apply to investigations of serious offences only and the person being interviewed is protected from having their statement be admissible except for serious charges if the case were to proceed to court. 
In addition to the increased powers for the Commerce Commission there are a number of other areas in the bill that the Green Party is particularly pleased to see including provisions preventing unfair contract terms in standard form contracts. One of the things I particularly questioned about this was whether that would mean it could rule out some very standard contract terms in banking contracts and insurance contracts and rule them to be unfair. The reply was that yes it could do that and that is a move that we hope will eventuate. 
However the change that the Green Party is most pleased to see in this bill is the proposed prohibition on making unsubstantiated representations. This provision will address an area that the Green Party has been concerned about for a long time. Many consumers base their purchasing decisions around claims such as having a reduced impact on the environment using 100 percent renewable energy being biodegradable using resources sourced from sustainably managed forests and so on and such conscious consumers will often be prepared to pay a premium on the price that they pay for the assurance of such claims. One of the really frustrating things for us is that so many claims are actually not true are misleading or are based on “greenwash” that we effectively have to become detectives or rely on pressure groups to do that detective work for us in order to be assured that the claim is in fact true or we have to cross our fingers and hope. We consider it to be a fundamental right of consumers to be confident that claims made for a product are based on truth. 
An unsubstantiated claim also disadvantages businesses that make the effort and do the research to ensure that their claims are based on fact. Currently the difficulty with the law as it stands now is that it can be very hard or costly to prove a claim is false and this has proved very onerous on the Commerce Commission. The crucial aspect about the proposed change is that the onus of proof about a claim will shift from the Commerce Commission to the business making that claim. Just imagine businesses will have to prove that the claims that they make about their products are true. It is disappointing that a significant number of businesses such as Meridian Energy argued that it would impose significant compliance costs and be too expensive for them to provide the evidence required. The solution to this is simple. If you do not have good evidence that your claim is true do not make that claim. 
 However the committee did take on board concerns about the possible impact on advertising creativity by recommending new clauses that make it clear that the provision does not cover representations that a reasonable person would not expect to be substantiated. I am sure that the makers of a very high-profile product will be relieved that they do not have to provide evidence of wing growth. 
The Green Party did have a concern that the Commerce Commission would not have sufficient powers to effectively enforce the prohibition on unsubstantiated representations—a point that was made by Consumer New Zealand. We considered moving an amendment to the bill to give the Commerce Commission the ability to issue power of substantiation notices as is the case in Australia. We sought advice from the Commerce Commission on this issue and have been reassured by the Commerce Commission’s view that the substantiation provision in this bill is superior to the substantiation in the Australian consumer law because it is simpler more easily enforceable and a better education tool. It has also informed us that it does not feel it needs specific substantiation notice powers because it expects to be able to use the existing information-gathering powers under section 47G of the Fair Trading Act along with if necessary the new compulsory interview powers to support the new prohibition on unsubstantiated claims. 
For this reason we are happy with this reassurance from the Commerce Commission. I am confident that it will be able to enforce the prohibition and therefore we are pleased to be supporting this bill. Thank you.