Sharryn Jackson (Hasluck, Australian Labor Party) Share this | Hansard source

I am pleased to speak in support of the Trade Practices Amendment (Australian Consumer Law) Bill 2009. This bill is the first component of the Australian consumer law, which will deal with a patchwork of 13 pieces of legislation scattered across the nation and establish a single national consumer law. I think it is a wonderful change to see a national law that simplifies the system as well as strengthens protections for Australian consumers.

The legislation seeks to achieve two very important things. Firstly, it considerably strengthens the ability of the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission to protect consumers. Secondly, it voids terms in business-to-consumer standard-form contracts if those terms are unfair.

Generally speaking, I would say that contracts are an excellent way of doing business—to record in writing the agreement between the parties—and it is even better if companies are prepared to use their resources to prepare written contracts properly so that all a consumer has to do is to sign. We have seen the introduction of many of these standard-form contracts in many industries. They are called ‘standard form’ because they are generally drafted by one side—ordinarily the business, ordinarily by a lawyer—and generally to protect the interests of the side doing the drafting. There should not be anything wrong with that, except that, as the previous speaker pointed out, many ordinary consumers are not necessarily in a position to, or are highly unlikely to, seek legal advice. Indeed, in some cases consumers may not even read the contract but rely on some general notions of good faith between the consumer and the supplier. This is despite stories of buyer beware and all of the rest.

What we have seen develop in Australia in some circumstances is an evolution of standard-form contracts that have got to the point where risks, rights and/or responsibilities are being shifted to an unreasonable and indeed unfair extent onto one party only. In these circumstances it is usually the consumer.

I think if there is a strong message in the Trade Practices Amendment (Australian Consumer Law) Bill 2009 to businesses in Australia it is this: if you are going to insert self-serving or unfair terms into your contracts, be prepared to defend them in court.

I know that there was some criticism of the legislation despite the fact that there has also been a call from many representatives of business in Australia for a seamless economy and for standard consumer laws across the country. We saw, for example, the Business Council of Australia, in March 2008, protest the multi-jurisdictional regulation imposed on businesses in Australia and call on the government to allow business to operate in a consistent environment.

This particular legislation—very sensible proposed legislation—has still managed to create, it seems, in some quarters, the need to run fear campaigns about what the legislation may mean. For example, the legislation has been criticised for creating uncertainty in a challenging economic climate. Frankly, I think that overstates things a bit. The contracts will stand; it is just that any unfair term of a contract will be void. The legislation provides clear guidance as to whether a particular term will be unfair and the circumstances in which it would be voided, and that is if the term causes a significant imbalance in the party’s rights and obligations under the contract and if the term is not ‘reasonably necessary’ to protect the legitimate interests of the supplier.

So I think you can draw two points from this. First, guidance as provided in this bill is not about creating uncertainty but about requiring business to take some care in the contracts they offer and to assess their risk properly. Second, it provides better protection for consumers from unfairness, and this is a very positive outcome in challenging economic times. Rather than creating uncertainty, it puts in place the groundwork to create greater certainty and greater surety about these consumer contracts.

Another argument raised by business representatives is that increased uncertainty will be an inevitable outcome of these new laws, but I think if you are in business and asking yourself, ‘Will I get away with this particular clause?’ rather than, ‘Do I need to include this clause to protect my legitimate interests?’ you can expect that this legislation will get you unstuck—and I think that is a very good thing.

The Western Australian treasurer has also criticised the legislation, if we accept the recent article in the Australian Financial Review indicating that he had written to the minister complaining that business-to-business contracts had been removed from the bill. Whilst I can accept that in some circumstances business-to-business contracts could be covered—or should be covered, and hopefully it may get to that point—the minister has made it very clear that there are better ways to protect small business, in particular, than with this law. It seems to me that in some circumstances the definition of ‘consumer’ is pretty broad and there may indeed be some independent contractors or subcontractors that may fall within the definition of ‘consumer’.

This bill, however, is primarily about consumer protection. The nature of the body of contracts between business and consumers is vastly different, in the main, from the collection of contracts between businesses. Consumer contracts span the range from the purchase of whitegoods, mobile phone contracts, gym memberships, rent-now-buy-later contracts, hire car insurance and car purchases to home loans and home building contracts.

However, as I have said, I think there are better and more specific ways of dealing with business-to-business contractual issues which avoid unintended consequences such as access-to-finance problems. Access to finance is already challenging for small business. Labor is not about to make it more difficult for small business to access critical finance by imposing ill-fitting, broad-brushed legislative obstacles. Labor is trying to do its job properly by looking at the specific issues facing small and medium enterprises, making sure that any legislation is appropriate to the needs of small business rather than lumping them in with the broader category of consumers. The government has undertaken an extensive consultation process on this legislation which has highlighted these differences.

In relation to the scope of business contracts, the government has identified that it is appropriate to further examine the unconscionable-conduct provisions within the Trade Practices Act that need to be considered along with a franchising code of conduct, and I support that course of action.

I think it is also fair to say that it would be unreasonable to have further consumer protection delayed while the specific issues affecting small business are considered. Some people have asked why consumer reform is necessary. I have heard many anecdotal stories in Western Australia from agencies and organisations such as the Consumer Credit Legal Service in WA, which provides advice and assistance to consumers. I have heard of consumers being charged as much as $20,000 to get out of their current credit contracts. What is worse, the formulas often used to calculate these exit fees are utterly incomprehensible. There is no way that a consumer can have an understanding of their likely cost at the time they sign the contract.

The unilateral change clauses are also cause for some concern, and we have seen this increasingly in some consumer contracts in Western Australia. These clauses are increasingly being entered into standard-form consumer credit contracts, which allow businesses to radically change the contents of the contract without having to reach or have specific agreement from the consumer. This is something that is unfair and needs to be made unlawful or improper.

There are also concerns in Western Australia about rent for purchase agreements or ‘rent try buy’, where a consumer can rent a product and then purchase it if they like. This can often be an attractive proposition, except where the consumer ends up paying more than double the market price for the particular item. It really is critical to put in place legislation that ensures that if consumers are going to enter into standard form contracts for these kinds of purchases then the contracts are transparent and fair. It should also be stressed that this bill exercises our constitutional powers to cover postal, telegraphic or telephonic services and, in particular, mobile phone contracts. I know a number of my constituents will be very pleased to see this included in the general law regarding consumer protection. Anecdotally, we have been advised that the Telecommunications Industry Ombudsman has a large volume of complaints and that the industry does not seem to be improving, so I think it will be a really powerful improvement to bring the telecommunications industry, and mobile phone contracts in particular, under the umbrella of this legislation.

The other limb to this bill for which the government ought to be congratulated is the additional powers being given to the national regulators—the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission—to protect consumers. Until recently the existing ACCC powers were described in a brochure available on its website, and I have to say it did not necessarily describe a comprehensive system of consumer protection. Indeed, whilst it did deal with issues such as unconscionable conduct and misleading or deceptive conduct as well as bait advertising, the brochure went on to say:

In enforcing consumer protection laws, the ACCC generally acts only against conduct that is industry-wide or that affects many consumers. This ensures it uses its resources effectively.

The brochure then explained in the next section, which was entitled ‘Private action’, that a consumer had the ability to take a company to court if they believed they had been ripped off. This seemed to be a fairly clear signal, I think, to unscrupulous operators that there were a lot of obstacles to ordinary consumers taking action against unfair or unconscionable conduct. The bill introduces a number of sensible, practical measures to enable the ACCC and ASIC to better protect consumers.

I note the introduction of infringement notices. The national regulators will now be able to deal with the minor breaches of the law which unfortunately seem to be partly ignored at present. The infringement notices provide a simple mechanism to impose a penalty before and potentially in substitution for legal proceedings, rather like a traffic infringement—something I am of course not that familiar with, I might say! I understand that, like with a traffic infringement, the accused can either choose to cop the penalty, for want of a better description, or defend the charge in court. This simple fact seems to have been overlooked by those who criticise the ACCC’s new ability to punish minor breaches of the law without tying up large amounts of resources. I think the critics believe that the ACCC will suddenly embark upon a spree, issuing infringement notices with gay abandon. Of course, that is not what is intended by the legislation, and I am confident that is not going to be the conduct of the ACCC.

The bill will also allow the ACCC and ASIC to impose substantiation notices. This gives the ability to require a person to substantiate claims advertised or represented—for example, in the real estate industry, or the ability of the supplier to supply goods or services advertised. This is sometimes described as ‘bait advertising’, where an item is advertised for sale but when the consumer goes into the shop the consumer is informed that the item is out of stock and is offered a similar, more expensive replacement. I note that substantiation notices, which will protect against bait advertising, have been criticised for enabling regulatory authorities to go on ‘fishing expeditions’. I suspect this criticism is only coming from those who might have a different idea of what is fair and proper conduct in the business world, and it is not a serious concern for people who are conducting their business in a fair and appropriate manner.

The bill will also allow the regulatory authorities to issue public warnings which have been christened ‘name and shame’ warnings. This is a sensible and, I believe, powerful measure to protect consumers without needing to have resource-intensive recourse to the courts. There is also the capacity for ASIC or the ACCC to apply to the courts on behalf of non-party consumers for the remedy of redress but not for damages. They cannot go for claims where the merit of the individual claim needs to be assessed, which is why damages are not available. This is an exceptionally practical tool for consumer protection. It creates a real threat against parties who rip off large groups of consumers for amounts which are relatively small enough that individual consumers will not take legal action to recover the sum. We also have the introduction of disqualification orders: ASIC and the ACCC are empowered, where a person disregards consumer protection laws, to seek a ban on that person being a director of a company if circumstances warrant it.

I think this is fantastic consumer protection legislation and I am pleased to support it. It reflects a broader package which will see the ACCC taking up leadership of the International Consumer Protection and Enforcement Network. It enhances the ACCC’s ability to protect Australian consumers in the global marketplace, such as from online deceptions. The government has also increased emergency relief funding and funding for more financial counsellors, with an extra $80.4 million over the next two years. I am delighted to see additional resources going into that area. Unit pricing becomes mandatory from 1 December 2009 for food retailers with areas of 1,000 square metres or more, and the Retail Grocery Industry (Unit Pricing) Code will be of great assistance to consumers.

We also have the review of implied warranties and ‘no cash refunds’. This will implement a legislative regime where the states agree that the Commonwealth legislation will apply, and therefore any amendments at Commonwealth level will automatically apply to the states. That way, it is hoped that we will not end up with a hash of inconsistent consumer laws operating across the Commonwealth.

As I said, I am delighted to speak in support of the Trade Practices Amendment (Australian Consumer Law) Bill 2009. I look forward to it being passed expeditiously by the parliament and to Australian consumers enjoying the benefits that it contains.

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