Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I welcome the opportunity to speak in support of the Trade Practices Amendment (Australian Consumer Law) Bill 2009. This bill addresses a number of matters associated with consumer law, and in particular responds to inadequacies relating to consumer protection. In summary, firstly, the bill provides greater consistency and uniformity in consumer law across Australia. Secondly, the bill provides the Australian Competition and Consumer Commission and Australian Securities and Investments Commission with new powers enabling these authorities to issue substantiation and infringement notices, impose pecuniary penalties and issue public warning notices in relation to recalcitrant conduct—in other words, to name and shame them. Thirdly, the bill introduces a national unfair contracts law which will apply in business to individual consumer contracts.

The bill is in response to a 2006 Productivity Commission inquiry and a subsequent October 2008 Council of Australian Governments agreement, and will require similar legislation to be enacted in each state and territory jurisdiction. The bill is the first stage of the government’s long-overdue reform to Australia’s consumer laws. The second stage will rename the Trade Practices Act the Competition and Consumer Act. It will also introduce a new national product safety legislative and regulatory regime. I also note that this bill has been the subject of widespread public consultation and numerous public submissions. The provisions of this bill apply to standard form contracts between business and individual consumers and do not apply to business-to-business contracts, with the exception made for sole traders who may have common business and personal interest in contracts in place.

Unfair terms in contracts are unfair whether they apply to contracts between business and individuals or between business and business. I note the concerns raised by the Council of Small Business of Australia that business-to-business contracts are not covered by this legislation. While I would have preferred to see the provisions apply to all standard form contracts, including business-to-business contracts, I welcome the comments made by the Minister for Competition Policy and Consumer Affairs in his second reading speech that a review is currently underway in respect of franchising laws and the unconscionable conduct provisions of the Trade Practices Act. I hope that that review will result in fairer treatment of many small businesses by the more influential, larger organisations.

Small businesses are themselves frequently the victims of exploitation by other businesses. Many small business operators have neither the expertise nor the resources to scrutinise business contracts. And just as many individuals do, they frequently enter into contracts with other suppliers in good faith and on the face value of the contractual arrangement they believe they are entering into. Making money out of unfair and hidden costs in contracts has regrettably become widespread business practice, even amongst many of Australia’s largest and best-known business organisations—practices which are unfair and which rip off unsuspecting consumers. The individual amounts involved in these rip-offs are often not large sums of money, but collectively, when thousands of customers are affected, they can amount to huge financial windfalls for the businesses using the unfair conditions.

Uniform consumer laws throughout Australia will be welcomed by both businesses and consumers. It is a matter that I and other speakers have talked about in this place on previous occasions. It is a matter that few people in this place would disagree on—that is, having uniform laws throughout Australia on all matters would make the lives of Australians, whether they are individuals or businesses, much easier. For businesses, particularly those working across state jurisdictions, complying with a range of consumer laws from eight state and territory jurisdictions must be a costly administrative nightmare. Likewise for consumers, who today are able to deal with businesses from right across Australia. Having uniformity will provide them with greater confidence and make their choices much easier.

It has been estimated that improved consumer laws throughout Australia will save the Australian economy up to $4.5 billion per year. That is $4.5 billion that can either go back into the hands of consumers, enabling them to buy other products or perhaps make ends meet, or be used by businesses to invest in growth and efficiency measures. This $4.5 billion could certainly be used in better ways than simply to rip off unsuspecting consumers. The provisions of this bill are yet another measure implemented by the Rudd government since coming to office to establish a seamless Australian economy.

The bill will be of particular interest to the legal profession—after all, it deals primarily with legal interpretations and legal matters. I note that the Law Council of Australia in its submission did not support the inclusion of the unfair contracts provisions in this bill. It instead argued that the existing laws on unconscionable conduct in both the Trade Practices Act and the Australian Securities and Investment Commission Act were sufficient. To quote the Law Council of Australia trade practices committee’s submission in response to the call for consultation from Treasury:

The Committee is not aware of any significant consumer complaints in relation to standard form contracts that would justify such a prohibition on a cost-benefit analysis to the economy.

The submission goes on to say:

The present unconscionability law under the Trade Practices Act already requires the courts to have regard to all relevant circumstances in determining whether unconscionable conduct has occurred.

The Committee expressed the view that considerations of fairness fall properly within the unconscionable conduct provisions of the Trade Practices Act and that another layer of complexity—in the form of a separate “unfairness” test for contract terms, is unnecessary and impractical.

I will provide some statistics later with respect to the evidence not being there to justify such a prohibition, but I do make three observations now in respect to the Law Council’s submission—and I have read it all. The first is that the submission essentially defends the merits of the existing legislation. It appears to me, on a reading of the submission, that the Law Council is biased towards business. That is an assessment I make, and perhaps the Law Council might disagree with me on that. Secondly, the submission seems to overlook the reality that most consumers will not seek justice in the courts for relatively small sums of money, even if they do feel they have been charged unfairly, and they quite rightly look to the government for the necessary protection. Thirdly, I believe the Law Council is out of touch with consumers. I note that the submission from the Legal Aid Office in Queensland is somewhat different to that of the Law Council and is much more sympathetic to consumers. It is another legal submission yet it seems to be somewhat different to that provided by the Law Council.

The Law Council’s views are in fact in stark contrast to the views expressed by consumer organisations such as CHOICE, which said in its submission:

CHOICE strongly supports both the decision to include unfair contract law provisions in the Australian Consumer Law and to standardise and improve the enforcement powers available to each regulator.

The CHOICE submission also quite rightly points out that often consumers have very little choice in the service contracts they enter into because the services are only offered by a limited number of providers who all use similar terms and conditions. Good examples of this are the large banks, the telcos and the energy suppliers, who operate in a sense in a market where there is limited choice, who each know what the competitor is doing and who each offer very, very similar contracts. They might be marginally different, but they are very similar and tend to use the same methods in trying to secure their customer base. Other speakers have made comments about the way some businesses operate and have also made the point that there are examples, whether it is with the banks, the telcos or the energy suppliers, where we tend to have consistency in the contracts that each of them use.

We live in a country that prides itself on being the land of the fair go. All too often, however, the notion of a fair go is thrown out the window by unethical business operators. I note that it is a trend that is increasing year by year. I want to quote some of the statistics in respect to the trends relating to consumer affairs complaints. South Australia’s Office of Consumer and Business Affairs handled 5,410 complaints in 2007-08, an increase of 20 per cent over the previous year. Assuming that represents about 10 per cent of the Australian total, that equates to a level of complaints of around 50,000 a year around Australia. That is just through the state and territory branch offices. ASIC dealt with 11,436 complaints in 2007-08, an increase of seven per cent from the previous year. The Financial Ombudsman Service in 2008-09 dealt with 19,107 disputes, an increase of 33 per cent over the previous year. The ACCC—the Australian Competition and Consumer Commission—responded to 65,336 complaints or inquiries in 2007-08, the last year for which I was able to get figures, an increase of 21 per cent from the previous year.

It is clear that the consumer protection laws in this country are not working well enough. Those figures, if nothing else, certainly in my view dismiss the comments made by the Law Council of Australia that there is insufficient evidence that we need to change the current laws relating to business conduct in this country. This bill in fact recognises that we do have a problem and is, after the 2006 Productivity Commission inquiry and the Council of Australian Governments meeting in October last year, now an attempt to rectify those problems relating to consumer laws in this country. Whether it will be adequate or not, time will tell. There is no doubt in my mind that, as with all laws, the provisions will need to be constantly monitored and reviewed.

It was a Labor government back in 1974 that introduced the Trade Practices Act and began consumer protection laws in this country. It is now the Rudd government that recognises that business and consumer practices have changed markedly since 1974 and that our laws need to reflect those changes. The government also recognises the shortcomings of the existing consumer protection laws in protecting consumers in today’s commercial environment. The ability of the ACCC and ASIC to include prohibited terms in these provisions, to issue disqualification notices, substantiation notices, infringement notices and public warning notices, to order redress where it has occurred and to impose pecuniary penalties and disqualification orders will make the ACCC and ASIC much more effective organisations and will expedite the resolution of consumer complaints. It will give consumers much greater confidence in the laws of the land protecting their genuine rights.

The minister has made it clear that this is not the end of the Rudd government reforms but in fact the start of many other reforms, which I know the minister is currently looking into. I understand that there are a number of other matters being reviewed at the moment, in particular matters relating to the franchising laws and the unconscionable conduct provisions of the Trade Practices Act. I commend the minister for introducing these provisions and I also commend him for his commitment to reforming and bringing up to date the consumer laws of this country. I believe that many of these reforms are long overdue and I believe that this bill is certainly a start in the right direction. I look forward to the outcomes in respect of the other matters that the minister is currently reviewing. I commend the bill to the House.

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