Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Hansard source

Labor supports this bill. It helps to clarify, correct and strengthen Australia's consumer protection and product safety regime, and Labor has always backed measures that help and protect Australian consumers. Labor introduced the Trade Practices Act in 1974, the first consumer protection legislation for our nation, and Labor created the Australian Consumer Law, the ACL, in 2010. The federal Labor government, in negotiating the 2009 intergovernmental agreement on Australia's consumer protection arrangements which preceded the ACL, built in a requirement that the new laws be reviewed within seven years.

The bill seeks to implement some of the recommendations of that review. The ACL Review was commissioned in 2015, issued an interim report in December 2016, and submitted its final report to federal, state and territory consumer affairs ministers in March 2017. At their annual meeting in August 2017, these ministers agreed on 15 recommendations for implementation. A number of other recommendations were referred for further review, consultation or policy work. The measures in this bill have been agreed upon by state and territory consumer affairs ministers, and have been consulted on extensively, both through the Australian Consumer Law Review process and in an exposure draft, but the measures don't fully implement all provisions agreed by the government with the states.

Of the 15 agreed measures, 10½ are in this bill, one was legislated in a previous bill and two are expected to be enacted through regulation. The 10½ measures, in the order in which they appear in the bill, are based on the following recommendations from the ACL Review:

Proposal 17: Ease evidentiary requirements for private litigants through an expanded 'follow-on' provision enabling them to rely on admitted facts from earlier proceedings.

Proposal 9: Extend the ACL (and ASIC Act) unconscionable conduct protections to publicly-listed companies.

Technical Amendment (a): Amend the definition of 'unsolicited services' in section 2 of the ACL to allow the false billing provisions … to apply to false bills for services not provided.

The first half of proposal 12 by the ACLR clarifies that the 'unsolicited selling' provisions can apply in public places, not just at a residence or a workplace. It's unclear why the second half of proposal 12, which captures third-party lead generators under unsolicited selling provisions, wasn't included in this bill. The bill also implements the following recommendations:

Proposal 13: Enhance price transparency in online shopping by requiring that any additional fees or charges associated with pre-selected options are included in the headline price.

Proposal 8: Strengthen ACCC powers to obtain information about product safety, by broadening the power to apply to any person (including a consumer) likely to have relevant information, rather than just the supplier.

Proposal 11: Enable regulators to use existing investigative powers to better assess whether or not a term may be unfair.

Proposal 19: Allow third parties to give effect to a community service order under the ACL.

This can include when the offending party is not qualified or trusted to do so. An example is a community service order providing for financial counselling where it would be inappropriate for an offending financial service provider to conduct that counselling. The bill then addresses the following proposals:

Proposal 5: Clarify the scope of the exemption from the consumer guarantees for the transport or storage of goods where those goods are damaged or lost in transit.

Technical Amendment (b): Amend section 12DC of the ASIC Act to address terminology that is inconsistent with other consumer protection provisions in the ASIC Act and that may unintentionally narrow the scope of the provision.

This relates to the consumer protection laws around the sale or grant of land and will make terminology more consistent through the ASIC Act. And finally, the bill addresses recommendation 16:

Proposal 16: Amend the ASIC Act to clarify that all ACL-related consumer protections that already apply to financial services also apply to financial products.

There are three other proposals agreed by the federal, state and territory consumer affairs ministers which have been, or are expected to be, implemented through other legislative vehicles.

The ACLR proposal clarifies the mandatory text requirements for warranties against defects by developing specific services and services bundled with goods. This was included in the exposure draft of regulations that accompanied consultation on the bill. However, I note that the government is yet to indicate when they're likely to implement those regulations.

Proposal 18 increases the maximum financial penalties available under the ACL. Of course, Labor took this policy with a tenfold increase in maximum penalties for anti-consumer conduct to the last election. We've been calling on the Turnbull government to implement it as a matter of urgency. We were pleased when the government announced that it would adopt Labor's policy in the 2017 budget.

Legislation to implement the increased penalties was introduced into the House on 15 February this year, and ACLR technical amendment C amended section 76 of the ACL, or the regulations, to clarify that disclosure requirements for unsolicited conduct arrangements don't apply in certain exempt agreements. This corrects a drafting error that obliges gas and electricity suppliers to disclose information about cooling-off rights or unsolicited consumer agreement even in circumstances where those rights don't apply. This was included in the exposure draft of the regulations that accompanied consultation to the bill.

Here, again, the government have not given an indication of when they intend to implement those regulations, and we would be keen to hear from the assistant minister as to the intentions in relation to enacting that recommendation. This brings us to one-and-a-half agreed proposals that are outstanding. The second half of one proposal relating to unsolicited selling is simply nowhere to be seen. We don't know what the government are doing with that proposal. Another recommendation to strengthen product safety recalls was featured in the exposure draft but removed from the bill for unknown reasons. Only the assistant minister knows why this was removed and won't explain it.

ACLR proposal 7 clarifies and strengthens voluntary recall requirements by introducing a statutory definition of voluntary recall and increasing penalties for failure or refusal to notify a voluntary recall in line with other ACL penalties. These provisions were included in the exposure draft bill but have been excluded from the bill as presented to the parliament. Again, the assistant minister hasn't explained why this has happened. It's another no-show from the assistant minister on this issue. We don't know if the government has abandoned this change contrary to the agreement it struck with states and territories last year, or is it, like so many other consumer reforms that the government has put, on the backburner while Australian consumers pay more?

What we do know is that the assistant minister and the government in general have what we could say are complicated feelings when it comes to product recalls. The Turnbull government failed to explain why it took six months for a compulsory recall of the deadly Takata airbags. They were asleep at the proverbial wheel when it came to this issue. The potentially lethal Takata airbags have been found to have misfiring inflators capable of firing shrapnel through the vehicle's cabin. This means drivers and passengers were risking life and limb whenever they got into certain vehicles. The airbags can turn a minor incident into a fatal crash. Misfiring Takata airbags are believed to have killed over 20 people worldwide, including at least one Australian. The alpha airbags have been identified as particularly dangerous with a failure rate of one in two compared to a failure rate of one in 400 for other Takata airbag models.

It was in August last year that the ACCC told the House Standing Committee on Economics that the deadly risk associated with the Takata alpha airbags meant they needed to be replaced immediately. That was the evidence that was given by the representatives of the ACCC at that hearing. The chairman, Rod Sims, also revealed that, as the Takata recall was voluntary at the time, there was little enforcement action that could be taken to ensure that everything possible was being done to replace the airbags.

The following day Labor called on the minister responsible for product safety, the current Deputy Prime Minister, to use his emergency powers under section 132J of the Competition and Consumer Act. We called for an immediate issuing of a compulsory recall of Takata airbags, amid growing concerns about the inadequacy of the voluntary recall process and renewed urgency around the alpha type of airbags. The result: nothing. The government did nothing. It took another six months, until February 2018, for a compulsory recall to be issued. They were asleep at the wheel whilst Australians were unknowingly risking their lives. Every time a person got behind the wheel or was a passenger, they were in danger. One Australian had already died, and it took six months for the government to take any action. What was Minister McCormack waiting for?

Now I want to speak about proposal 12, which clarifies that the 'unsolicited selling' provisions capture suppliers in their negotiations with consumers where suppliers obtain from a third party—sometimes referred to as a lead generator—a consumer's contact details or permission to be contacted. This wasn't even included in the exposure draft of the bill, and again we await an explanation as to why. It's yet another sign, as if we needed more, of the government's half-hearted approach to ensuring Australian consumer protections. Perhaps even saying 'half-hearted' may be generous. While the government make the right noises about reforms that were already in train or reviews that Labor started, in the end they always fall short. We've seen the government drag their feet on payday-lending reforms, we've seen them try to confuse consumers around measurement labelling, and we've heard nothing but talk in relation to improving consumer protections for retirement home residents. But Labor has been working to improve outcomes for Australian consumers—with or without the government.

There would be few better examples of the government's reluctance to improve protections for vulnerable consumers than their approach to payday lending and rent-to-buy schemes. We've seen these changes flicked back and forth between ministers and the assistant minister since the small-amount credit contract review reported in early 2016. Under amendments made by Labor in 2012 to the National Consumer Credit Protection Act, the government commissioned a review of small-amount credit contracts in 2015, which reported to the government in March 2016. The government's response was released in November 2016. Minister O'Dwyer indicated in February 2017 that drafting was underway, and we were told that the drafters were putting pen to paper to implement the SACC review's recommendations. But the following day, under questioning from Senator Katy Gallagher, Treasury revealed in estimates that the minister was incorrect and that drafting actually had not commenced. In the 2017 budget estimates, in May, Treasury again confirmed that drafting had not commenced around this particular reform. The former member for Perth, Tim Hammond, led a private member's motion debate about the SACC reforms in the Federation Chamber on 4 September last year. Then by late 2017, after responsibility for the reforms had been delegated to the Minister for Small Business—now the Deputy Prime Minister—the government released an exposure draft of the legislation. It meant to enact the recommendations of the SACC review and promised that the bill would enter the parliament by the end of that year. To date no legislation has been introduced and, following the December 2017 reshuffle, responsibility for these reforms has been brushed off to the member for Deakin.

Those on very low incomes have little or no capacity to absorb financial shocks. With little disposable cash after bills are paid and with little savings put away for a rainy day, one of the obvious options is a payday loan. We've all seen the TV ads. There's a profligacy of these payday lenders now springing up and using advertising—cash while you wait, and loans via apps. They're springing up everywhere.

There are also rent-to-buy schemes for consumer leases, under which a consumer will enter into an arrangement by which they rent a consumer good—a vacuum cleaner, a fridge or a dishwasher—from a company for a period, and at the end of the period they get to keep the good. This is becoming increasingly common with mobile phones. Labor recognises that these types of unconventional small-finance arrangements play a legitimate role in smoothing out the swings and roundabouts of modern life for low-income families. However, we do remain opposed to credit contracts that see some of the lowest income citizens being trapped in cycles of debt in which, if they don't meet the initial repayment obligations, they are forced to pay interest rates that often are in the hundreds of per cent when they come to paying back the debt. Cash loans are being described as leases to avoid caps on costs under national credit laws, and leases and loans have been given to people who already had financially crippling debt repayments for existing loans. Rent-to-buy contracts have ended up costing consumers over 800 per cent of the retail price of the good. Payday lenders are using loopholes to avoid having to follow the rules of the National Consumer Credit Protection Act, and some providers have incorrectly used rent alone to calculate an applicant's expenses without taking into consideration grocery costs, bills and other cost-of-living items.

On the positive side, some small-amount credit contract providers have waived fees and created special payment plans for people in extreme circumstances. There are other options for those who need small loans. For example, the No Interest Loan Scheme makes loans of up to $1,000 available for low-income consumers. They are available via community organisations. NILS is operated by Good Shepherd Microfinance and is supported by the Australian government and the National Australia Bank.

But low-income consumers on fringe finance should not have to rely on credit companies' charity and goodwill. They need robust consumer protections. That's why in February Labor introduced the government's consultation draft of its payday lending reform bills as a private member's bill. The government was dragging its heels, and Labor came to the party and actually introduced the legislation—the exact same legislation—on behalf of the government. It shouldn't come to that. If the minister responsible was doing their job they wouldn't drag their heels. They would get this legislation into the parliament. Labor's payday lending private member's bill implements the government's own policy in relation to the reforms as expressed in its response to the SACC review over a year ago. As such, the bill must be supported by government members. It isn't just a stunt to get the government's failure to implement anything that looks remotely like an agenda; it's about having a heart and implementing the recommendations that have been agreed to by the council of ministers.

In summary, Labor supports the passage of this bill. We can't let it pass without noting that the government is failing in its responsibility to protect consumers and implement the recommendations of the reviews that have been undertaken and the agreements that have been made by the ministerial council through a COAG process. As is the case with payday lending reforms, we can only assume that the government is hoping that it can quietly sweep these policies—policies that the Deputy Prime Minister has already agreed to—under the carpet. Labor won't allow that. That's why we've introduced the private member's bill. That's why the government should bring that on for debate and finally allow and agree to these reforms going through the parliament.

See this speech in context