Belinda Neal (Robertson, Australian Labor Party) Share this | Hansard source

I rise in support of the Trade Practices Amendment (Clarity in Pricing) Bill 2008 and in support of consumers both of Robertson and Australia-wide. It is my firm view that the protection of consumers in the marketplace is a fundamental policy priority for Labor, and I am pleased to see that we are acting in this particular case. A consumer is entitled to make a considered and informed decision in the marketplace about what products or services to purchase and at what price. Unless suppliers are required to clearly communicate the price of an item, consumers do not have the essential information to make a reasoned choice.

The bill before the chamber today goes to the core of this principle of consumer rights. Schedule 1 of the bill repeals the existing section 53C of the Trade Practices Act and replaces it with a new section which provides a prohibition, when supplying goods or services or advertising them, from making a representation of the consideration for the item that is only part of the price, unless that representation also indicates the total price with equal prominence. There is an exception in that the delivery price does not have to be included in the single price. Further, the section only applies where the goods or services are provided by businesses to consumers.

Schedule 2 provides three further minor technical amendments to the Trade Practices Act. They are: an extension of the act to cross-reference section 61 in relation to pyramid selling schemes, to clarify that the breach of notices under section 65E can be a criminal offence, and amendments that provide that state and territory trading laws operate concurrently with the federal legislation.

The core of this bill though is the idea that consumers, in order to make a properly considered decision, must have access to honest and clear information on the cost of the product or services that they are purchasing. A consumer is not honestly informed of the price of an item if they do not know what the total cost is. This amendment, within the range of consumer legislation, is aimed at assisting consumers to make better purchasing decisions by providing them with this better information. Policies that assist consumers to be better informed and confident consumers also assists in invigorating competition which, in turn, encourages efficiency and innovation. This type of problem is common in the sale of cars and other desirable consumer items such as computers, large-screen TVs, holidays and travel. These types of sales are often coupled with complex finance arrangements which make it even more difficult for consumers to determine the true final price of the item. After listening to previous speakers, I have to say that this sort of trick is often used to engage consumers emotionally in feeling committed to the wonderful experience of having that wonderful holiday: thinking they can afford it, committing themselves emotionally and then finding it is beyond their capacity to pay for it. That is a very sad situation because many people, once emotionally engaged, go on to purchase the item, commit themselves financially and then find they have difficulties paying, which can often lead to quite dire results.

The main intention of this bill is to rectify a failure in section 53C of the Trade Practices Act which was introduced by the previous Labor government in 1986. The original intention of the section was to prohibit a corporation from advertising part of the consideration payable for goods and services without disclosing the full price. The intention of this section was undermined by a Federal Court decision in 2002—that is, the Australian Competition and Consumer Commission v Dell Computer Pty Ltd. The case determined that the advertising of a price that showed the component parts of the price and not the total was not a breach of the previous section. I note that it is somewhat ironic that the component part was actually in relation to delivery costs of the Dell computer. In fact, in this particular piece of legislation we have allowed the delivery costs to be left out. But notwithstanding the detail of the decision, it did have the effect of undermining the true intention of the section.

The effect of this decision was that suppliers of goods and services were free to show a price for an item as components and there was no necessity to show the total price. The entire rationale of the section as originally carried by the parliament was undermined. The previous, coalition government made reference to this problem in 2005 but, other than the release of a draft amendment to the Trade Practices Act, took no further action. It seems that after opposition from the business community, the then Parliamentary Secretary to the Treasury, Chris Pearce, sent the proposals off to the Productivity Commission for an inquiry that was to take up to one year. He probably considered it likely that action would be precluded by the intervention of an election. And that is, in fact, what took place. Unfortunately this is often the view of the coalition: that action to protect consumers is not a particularly high priority. I am pleased that this government has taken action to remedy a problem that has been apparent for some years. For Labor, the protection of consumers is important and I look forward to further action in this area from the minister, Chris Bowen.

Another area of consumer law, or unequal relationships between consumers and a supplier of goods, that I believe needs further examination and action is in the situation where unreasonable and one-sided contract terms—the so-called unfair terms—are imposed on a weaker party by a party with greater power. This can arise in a situation where a consumer with a credit contract or a mortgage is dealing with a bank or finance company or a consumer is negotiating a mobile phone contract. It also may happen where a small business is dealing with a large retail landlord or a franchisor.

This area of unfair terms has been identified as being an area of deficiency in our consumer law by the Productivity Commission report released in April this year titled Review of Australia’s consumer policy framework. In my view, it is an area that cries out for greater attention and further protections for consumers and small businesses dealing with larger businesses. It is more and more the case that corporations are combining with others, becoming larger and becoming national. In many industries the businesses are becoming so large and extensive that national corporations now provide 50 per cent of consumer needs in Australia. Further, in some industries such as communications, companies that operate nationally supply 90 per cent of this type of product for Australian consumers. They have a tendency to have a standard contract and the option for the consumer is to take it or leave it.

The concept of a consumer and supplier negotiating on an equal basis is a mythology. Have you ever contacted your bank prior to signing your mortgage and asked to vary the terms or tried to negotiate a lower rate for international roaming with your telco? Generally you are offered a product and your choice is to accept or reject it. The inclusion of unfair or unreasonable terms most commonly arises in these ‘standard form’ non-negotiated contracts. The worst examples allow the more powerful party, generally the supplier, to vary essential terms at will. This is most commonly seen with financial contracts such as mortgages, where banks can vary interest rates at will. If most people had a close look at their mortgages, they would find that the bank can actually call in the loan at any time.

The introduction of consumer protection legislation in this area of ‘unfair terms’ has already occurred in Victoria and also in overseas jurisdictions such as the United Kingdom and the European Union. To date the ministerial council has not yet determined an appropriate regime in this area, but I am sure that with greater consideration such a scheme can be identified. In this more and more globalised and corporatised world, the arguments are strong to protect consumers from the abuse of unfair terms. This means that supplying businesses that are in a very powerful position and are highly unlikely to willingly negotiate with individual consumers will be able to be called to account for unfair terms. I hope this is an area the minister will take action on. Meanwhile, I congratulate the government on this initiative and urge the support of the chamber for the bill.

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