Young Jonathan: Consumer Law Reform Bill — Second Reading 
Text is incorporated into the Bound Volume 
Young Jonathan: Consumer Law Reform Bill — Second Reading 
[Sitting date: 11 December 2012. Volume:686;Page:7414. Text is incorporated into the Bound Volume.] 
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am very pleased to stand and speak at this second reading of the Consumer Law Reform Bill. A review of consumer laws commenced in November 2009 with the then Minister of Consumer Affairs presenting to consumer and industry representatives proposals for a modernisation of and a reduction in a number of consumer laws. All except one of the laws covered by the Consumer Law Reform Bill are more than 20 years old and have not been reviewed in that time so this is a timely and very important review and update of our consumer laws. Consumer laws are such that they should be seen as fundamental laws that should stand the test of time and not need regular amendment. 
One of the areas in the bill that the Commerce Committee has worked on is this area of unfair contract terms. Major work was undertaken by the Australian Productivity Commission in its jurisdiction to determine the extent to which unfair contract terms were problematic in Australia. This was outlined in the commission’s report in 2008 on the Australian consumer policy framework. Its investigation uncovered largely anecdotal evidence of an existing problem. The Productivity Commission’s report cited studies that indicated between 5 to 15 percent of all consumers may be detrimentally affected by unfair contract terms each year. We note also that internationally modern consumer law provides protections against unfair terms in standard form contracts. In Australia provisions for unfair contract terms are included in the Australian consumer law alongside protections against misleading and deceptive conduct. 
A term is an unfair contract term only if it is declared as such by the High Court or a District Court on application of the Commerce Commission. This process would ensure that the Commerce Commission was given control of the enforcement of unfair contract terms and it is most likely that the Commerce Commission would be talking to firms that are using unfair contract terms and would see them comply prior to declaration by a court. 
The Commerce Commission’s submission noted that in its fair trading enforcement work it had identified some issues that may have been more effectively dealt with if there were or had been unfair contract terms provisions. Here are some examples. 
A telecommunications company increased the customer’s monthly plan price for their broadband service from $35 to $40 a month 6 months into a 2-year contract. In doing so the company relied on a term permitting unilateral price increases in its standard form contract of service. The company told the customer that the price increase was due to an increase in the wholesale that it was paying to a third party for the service. The company insisted that a significant termination fee would be charged if the customer cancelled their contract due to the increased price of the plan. 
Another example is a rent-to-own scheme that included terms and conditions in its contracts to the effect that the consumer did not purchase the property but was granted a right to occupy the property under a 30-year instalment agreement. There were a number of contractual terms that were likely to have been regarded as unfair. For example the occupiers had to pay for any repairs that the investor companies said needed doing. Also if the occupiers failed to meet a payment at any time in the 30-year period the agreement could be terminated. So here are some examples where we would say that consumers were definitely getting the rough end of the stick. 
In another example a company leased water filters to the lessee for a period of 2 years for a minimum price of $15 a week. The contract included a clause requiring the lessee to exercise a right of purchase or cancel within 7 days of the end of the lease. If the lessee failed to purchase or cancel then the contract automatically rolled over for a further period of 2 years on the same terms. These requirements were not clearly disclosed to the lessee when the contract was entered into. 
We can see that there are some obvious changes in this Consumer Law Reform Bill. Unfair contract terms is just one significant area. Other areas were acceptable quality guarantee. That is to do with the expectation that a consumer might have that their product has an acceptable quality and also the implications and obligations of the trader in that regard. We looked at online auctions. Of course that was a very important area. One of the areas I think that we have come through to an agreement on is that there should be no mode of sale that is exempt from the Consumer Guarantees Act. 
I am very happy to commend the good work of our committee the Commerce Committee and this bill to the House. Thank you.