Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Hansard source

I am certainly pleased to rise to speak to the Trade Practices Amendment (Australian Consumer Law) Bill 2009. In principle, the coalition broadly supports this piece of legislation. As a number of speakers in this debate have already outlined, and as others will no doubt reiterate over the course of the next hour or more, there are two key limbs to this debate. The first is those aspects of unfair contracts concerning business-to-consumer transactions and the second is those that deal with business-to-business transactions. When the government first announced that it would introduce measures to deal with unfair contracts, this legislation was to embrace both business-to-consumer and business-to-business transactions, with an emphasis on small-business transactions. Ultimately, though, with the change of minister from Chris Bowen to the member for Rankin, Craig Emerson, the government moved away from its commitment to Australia’s 2.4 million small businesses with respect to business-to-business transactions so that now the legislation only embraces business-to-consumer transactions.

As the shadow minister for small business, independent contractors, tourism and the arts, I see this legislation from a number of perspectives. There is a need for increased scrutiny of the operation of standard-form contracts. This relates to situations where, for example, a consumer obtains a mobile phone, bank account, gym membership or some such service and is typically—and we all would be very familiar with this—faced with a standard-form contract. The terms and conditions are printed on the back. There is no negotiation and no discussion; just the standard terms and conditions. Typically, those standard-form terms and conditions include a number of elements that would be considered detrimental to the best interests of the consumer.

This legislation seeks to remedy that. It seeks to in some way empower consumers—and I must say that the coalition is certainly a very big believer in the empowerment of consumers. Insofar as this legislation and the relevant provisions within it pertain to empowering consumers over standard-form contracts, I think it is a step in the right direction, as indeed does the coalition. That is the reason we have indicated to the government that we want to work proactively, in bona fide good faith, with the government to ensure we pass the best possible piece of legislation.

Unfortunately, there is still a little uncertainty with respect to business-to-business transactions. Having spoken with a number of small business advocates, I know there are elements of the small-business community that retain the view that this legislation is deficient because it does not deal with business-to-business standard-form contracts. For example, the Council of Small Business of Australia, COSBOA, holds the view, and certainly made it very clear from the get-go, that it would like to have seen business-to-business transactions included in this legislation. And there are others who have expressed that point of view.

I am someone who feels that the best thing we can do is ensure that we impose as little regulation as possible on the marketplace and, where we do impose regulation, ensure that we do so in a light-touch way. Therefore the notion of a business-to-business transaction or a business-to-business standard-form contract being included within the ambit of this legislation was not immediately attractive to me. Rather, I thought that perhaps a more advantageous way to move forward—and I believe this viewpoint is shared by the Minister for Small Business, Independent Contractors and the Service Economy—is to look at remedying imperfections that exist under the Trade Practices Act, because at its core the Trade Practices Act is meant to deal with exactly these kinds of situations. At its core, the Trade Practices Act should deal with unfair contract provisions in business-to-business transactions. In that respect, especially when it comes to, for example, provisions such as unconscionable conduct, I would have thought that a more appropriate policy remedy would be to ensure that unconscionable conduct provisions work in a more adequate way to address any perceived or actual imbalance in business-to-business standard-form contracts.

I heard, and to some extent welcomed, the government’s comments that it will be looking at reviews of the Trade Practices Act and the Franchising Code of Conduct, but I urge Australia’s small-business sector to exercise caution. This government certainly has a very strong track record when it comes to reviews, but unfortunately that is not what counts. What counts is your track record with respect to reform and execution of recommendations from reviews. I have raised in this chamber on a number of occasions the great concern that exists over the small-business minister dragging his feet over reform of the franchising sector, one of the key and most fundamental small-business sectors in the Australian economy. People in that sector have been waiting for months and months for the minister to respond to a standing committee report into franchising—yet here we are, still waiting.

So I am a little concerned when the government says that it intends to deal with business-to-business transactions or standard-form contracts through reviews of the Trade Practices Act and the Franchising Code of Conduct. I implore the minister to acknowledge that this is too important to simply let through to the keeper. We should not allow a situation to arise, and on behalf of the coalition and other members I certainly will not allow it to arise, where this government drags its feet for another year or two years or longer, which it has form on when it comes to business-to-business transactions and, in particular, amendments to the Trade Practices Act and the Franchising Code of Conduct. That is why we will continue negotiating with the government in the Senate to get a workable series of amendments in place that make this legislation even better. That fits very nicely within the overall focus of the coalition to support the introduction of a single national consumer law that replaces the various regimes that currently operate in each state and territory. It is clear that the pursuit of this goal brings benefits to both businesses and consumers, helps to reduce costs and provides more clarity about the obligations on and rights of parties that exist wherever goods are bought or sold.

When it comes to these kinds of transactions I know there is a lot of angst in the community with respect to business-to-consumer standard form contracts. I regularly hold listening posts in my Gold Coast seat of Moncrieff for the opportunity to be out there on a weekend and to talk to my constituents. Most recently, I had a lady approach me at my listening post to outline her concern over some events that had taken place with her son. Her son was 17 years of age and had been, to use her information, bullied into purchasing five mobile phone contracts on one day. He was not bullied by the mobile phone operators; he was bullied by the peer group with which he was hanging out. That peer group encouraged him to go out and take a number of contracts across a number of different carriers for mobile phones, and he did. On that day, he took out five contracts. As he walked out with the five mobile phones at the end of this process, he was robbed. The phones were stolen from him and the phones no doubt were misappropriated for other purposes. But, that situation notwithstanding, we had a situation where the actual liability that existed as a result of these standard form contracts for this particular individual amounted to thousands and thousands of dollars, far beyond his and that of his household’s ability to pay.

As a matter of principle, this constituent came to see me to share with me her concern that this situation should be allowed to arise, but recognising at the same time that some fault of course did lie with her son, and in addition to express her dismay at the intransigence of the mobile phone carriers to waive certain charges and penalty charges that had been put in place notwithstanding the circumstances. I had a great deal of sympathy for her and worked closely with her through the Telecommunications Industry Ombudsman and others to try and resolve that matter. I think to myself that the legislation before the House today may address in some small way those kinds of circumstances should they arise again. In that way, I think it is a positive that the government is taking this initiative, and that is the reason why the coalition is certainly supportive.

There are, of course, some legal concerns that may potentially mount off the back of this legislation. For example, the financial services industry is particularly concerned about this proposed contracts regime. Reservations include there being no burden of proof with the complainant, that there is no provision for a court to consider the consumer benefit that may flow from an impugned term, that there is no requirement for the consumer to show actual detriment in seeking to have a term of a contract declared void and that there will be potentially high compliance costs and confusion that arises from the application of the law to existing contracts that may be renewed or varied after commencement. These are all matters that certainly the coalition would be looking for the government to provide clarity on.

It is important that the government displays a clear sense of vision and explanation around these kinds of issues. That has not been the case with this piece of legislation over the lead-in period to this bill before the House. As I said, there was a lack of clarity about whether or not business-to-business contracts would actually be included. It is very important when these legitimate concerns are raised about the potential legal ramifications of this legislation that the government puts it very clearly on the table exactly the situation with especially contracts entered into prior to the royal assent of this legislation which would then subsequently be reviewed or varied after the commencement period.

I simply wanted to raise those matters not only on behalf of my constituents on the Gold Coast but also on behalf of Australia’s small business sector. The coalition continues to work, and I as the delegate of the coalition continue to work, closely and collaboratively with Australia’s small businesses and small business advocacy groups to ensure that we develop a policy that reflects their very genuine needs and desires and to ensure that we do not unjustly increase compliance for small businesses. It is clear that there is a benefit that flows from unfair contracts legislation, but it is also clear that if it is wrong it will simply mean more red tape, more compliance and, potentially, lost sales for Australia’s small business sector. In that respect, I think it is important that we work in a proactive and bona fide way with the government to ensure that this legislation is made into the best possible piece of policy that can be achieved.

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