Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

by leave—In June, I reported to the House on the important agreement that had been reached between the Commonwealth and the states and territories to move to a single national product safety regime. Today, I want to inform the House of another important milestone in the government’s consumer policy reform agenda which will be to the benefit of both consumers and businesses. These reforms will bring Australia’s consumer protection laws into the 21st century and reflect the Rudd government’s commitment to a seamless national economy. Business will also benefit from a reduction in compliance costs as nine sets of consumer laws are folded into one new single national consumer law.

On 15 August 2008, the Ministerial Council on Consumer Affairs (MCCA) had an historic meeting in Hobart where it reached agreement on a range of policy initiatives aimed at providing national consistency in Australia’s consumer laws, the enforcement of these laws and the way in which these laws are developed. The centrepiece of these reforms is a single, national consumer law. On 3 July 2008, the Council of Australian Governments (COAG) agreed to a comprehensive set of reforms designed to create a seamless national economy. One of the key areas of reform was the development of an Australian consumer policy framework. COAG requested the Business Regulation and Competition Working Group, in cooperation with the ministerial council, to develop an enhanced national approach for Australia’s consumer policy framework, drawing on the final report of the Productivity Commission. The ministerial council has agreed to propose to the Business Regulation and Competition Working Group that all Australian jurisdictions agree to adopt a national consumer law based on the consumer protection provisions of the Trade Practices Act 1974. COAG will now consider the recommendation for an enhanced consumer policy framework at its October meeting.

The new national consumer law will have the following features. It will be based on the current consumer protection provisions of the Trade Practices Act and also incorporate appropriate amendments that reflect best practice in state and territory legislation. The new law will be developed with the agreement of all Australian governments and made law through an application legislation scheme with the Commonwealth as the lead legislator. Amendments to the national consumer law must be agreed by governments according to an intergovernmental agreement, which will, among other things, provide for the amendments to be agreed to by the Commonwealth plus four other state and territory governments, of which three must be states. This is a similar voting mechanism to that which exists for making changes to the Corporations Act 2001.

These new generic consumer provisions will apply to all sectors of the economy, with the exception of the financial services sector, which will need to retain a distinct legislative framework. However, the Commonwealth government is committed to maintaining consistency between these two sets of laws to the extent that it is practicable. There will be joint enforcement of the national consumer law by the ACCC and the state and territory offices of fair trading, as was recommended by the Productivity Commission’s report into Australia’s consumer policy framework. ASIC will retain responsibility for administering the consumer law that applies to financial services. This single national consumer law will also include a provision that addresses unfair contract terms, as was recommended by the Productivity Commission, and will adapt some features of the existing Victorian law.

The ministerial council’s agreement on a national consumer law has been widely welcomed by both consumer and industry groups. The Director of Policy and Campaigns at CHOICE, Gordon Renouf, said:

Under the new national consumer law, Australian consumers are set to enjoy some of the best and fairest markets in the world.

New national laws banning unfair contract terms in consumer contracts will give consumers the confidence so desperately needed in today’s marketplace.

The Australian Chamber of Commerce and Industry’s Greg Evans said:

It’s an important step towards a seamless national economy.

The Director of Corporate and Public Relations at Woolworths, Andrew Hall, said:

It has been Woolworths’ experience that state legislation regulating specific activities has different and, at times, inconsistent requirements with no apparent consumer benefit.

As one of the nation’s leading retailers, we applaud state and federal governments for agreeing to work together to reform consumer protection laws.

The wide chorus of support for a new single national consumer law is not really a surprise.

In much the same way as was outlined to the House on the government’s product safety reforms, it is essential that our consumer laws keep pace with developments in national markets. On the one hand, you have consumers who move across state and territory borders and also make purchases across these borders and, on the other hand, you have businesses with operations stretching across these same boundaries. So it is only right that we have a national consumer law that reflects these realities and can more easily and effectively respond to national challenges.

I would like to take some time to outline to the House what a national unfair contract term provision will achieve for Australian consumers. An unfair contract term prohibition is certainly a concept that would not be familiar to many Australian consumers and businesses, but it has the capacity to provide important and overdue consumer protections for consumers and small businesses.

Consumers face many challenges when making decisions about purchasing goods and services, not the least of which is the use of complex contracts that are difficult to read and to understand. The terms of agreements can contain the potential for considerable consumer harm—particularly when they are one-sided or seek to impose onerous conditions on consumers that are not reasonably necessary to protect the legitimate business interests of the supplier. A prohibition on unfair contract terms addresses this potential for harm to consumers and increases competition. It does this by improving the clarity and transparency of agreements, helping consumers understand them better and enabling them to make choices that are more effective.

In its review of Australia’s consumer policy framework, the Productivity Commission recommended that a national unfair contract terms prohibition be included in a new national consumer law to address the inclusion of unfair terms in standard form contracts. Unfair contract terms regulation exists in the European Union and has applied in the United Kingdom since 1999. The Commonwealth has paid careful attention to the way in which the law operates in the UK. In Australia, Victoria already has an unfair contracts term provision, but there was evidence of other states and territories looking to go it alone, which made it all the more important that the Commonwealth take leadership and push for a national unfair contract term provision.

In response to COAG and the Productivity Commission’s recommendation, the ministerial council has proposed that a national consumer law should include a provision that addresses unfair contract terms. This provision would include, amongst others, the following features. It would only apply to standard form contracts and, using the approach adopted with the United Kingdom’s Unfair Terms in Consumer Contracts Regulations 1999, would exclude the upfront price of the good or service from consideration. A remedy could only be applied where the claimant shows detriment, or a substantial likelihood of detriment, to the consumer.

When a court considers an ‘unfair contract term’ it will be required to take all of the circumstances of the contract into account, including the broader interests of consumers as well as those of the particular consumers affected.

Where these criteria are met, the unfair term would be voided only for the contracts of those consumers or that class of consumers subject to detriment, or the substantial likelihood thereof, with suppliers also potentially liable to damages for that detriment, along with other remedies available under the Trade Practices Act 1974.

Under the new unfair contract term provision, there would also be potential for private and regulator-led representative actions for damages by a class of consumers detrimentally affected by unfair contract terms. Importantly, there should be transitional arrangements put in place after enactment, which would give businesses the time to modify their contracts, and there would be a review of the provision within seven years of its introduction.

As I outlined to the House previously, when you take the new national consumer law with all of the changes to the consumer policy framework, the Productivity Commission estimates that the implementation of these reforms will provide a net gain to the community of between $1.5 billion and $4.5 billion a year in today’s terms. This is truly an agreement that will benefit both consumers and businesses and bring our consumer laws into the 21st century.

I would like to thank my state and territory ministerial colleagues and their officials for the spirit in which they have conducted negotiations and moved along reform proposals in sight of yet another historic agreement. This agreement shows what is possible when you have a Commonwealth government committed to reform and to working cooperatively with states and territories. This agreement would not have been possible under the previous government, which did not even have a Minister for Competition Policy and Consumer Affairs to manage such an important reform. I commend the national consumer law reform to the House.

I ask leave of the House to move a motion to enable the member for Cowper to speak for 10 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Hartsuyker speaking for a period not exceeding ten minutes.

Question agreed to.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of Opposition Business in the House) Share this | Link to this | Hansard source

May I say at the outset that we on this side of this House welcome the statement by the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, albeit with some reservations. Indeed, we welcome all practical and sensible measures to reduce the diversity of legislation currently operating in the states and territories. I have said many times that the Australian economy is handicapped by a lack of uniformity, particularly in legislation that affects business. Not only does it result in increased costs for companies that operate interstate—costs that feed through to the consumer—but it also weakens our competitive position internationally. There is also a cost to the taxpayer in maintaining separate bureaucracies in each state.

The diversity of legislation makes it harder for companies to compete and grow their market share abroad. We do not have a large internal market in Australia, unlike the European Union, the United States, China and India. For our economy to prosper, we need to be competitive in export markets and competitive with those countries which have single national legislation covering the conduct of business.

I note the estimate by the Productivity Commission that these reforms will produce a net gain to the community of between $1.5 billion and $4.5 billion. I would remind the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs that, as long ago as 2006, the Productivity Commission calculated that a reduction in regulatory compliance costs would result in a saving of $8 billion a year, or 0.8 per cent of GDP, through developing a national approach to policymaking in a range of areas. This would be a significant bonus for the national economy, and I hope that the minister and his colleagues bear that in mind in their negotiations with the states and territories on other important matters such as workers compensation and occupational health and safety.

In this case, it is not just business that benefits; consumers will also enjoy rights that are consistent across Australia. With the huge growth in e-commerce over the last few years, we owe it to consumers to deliver consistency within our national boundaries, even if we cannot guarantee it in international transactions. Consumers will, of course, also benefit from the ban on unfair contract terms and the provision for action for damages for classes of consumer affected by unfair terms.

We also welcome the efforts made to ensure that, having adopted the single national consumer law, the states and territories stay in step with each other and that the law remains consistent across the land. I trust we will see this admirable approach followed when it comes to other parts of the government’s agenda on the seamless economy. After years of stalemate at the Council of Australian Governments, with the states and territories refusing on principle to agree to rationalisation, I sincerely hope that they continue to act in the national interest so the Australian economy and all Australians can benefit from greater consistency and efficiency.

Talking of consistency, we are on the record as favouring the enforcement of consumer law being placed solely in the hands of the ACCC rather than the proposed joint arrangement with the state and territory fair trading offices. That remains the case. Not only would a single national enforcement body be more efficient with lower costs to the taxpayer but it would also ensure consistent enforcement. It is one thing to have a single national consumer law, but if that law is not consistently enforced then many of the benefits to businesses and consumers will be lost. Both groups need to know that the same interpretation of the law will apply on both sides of a state border. I would welcome further information from the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs on how he intends to deliver consistent enforcement.

Reform of the Commonwealth and state legislation has the potential for huge benefits. What we are really talking about here is nothing less than the modernisation of the Australian economy. Until recently the government has had the benefit of dealing with Labor administrations in all states and territories. I am sure that we can count on the new administration in Western Australia to do what is right for Western Australians and all Australians when it comes to practical and sensible reform.

Consumer law may well prove to be the easiest of areas to rationalise and yet the government did not go far enough on the matter of enforcement. The next challenge for the government is to ensure that a single national consumer law and product safety regime is drawn up on the basis of best international practice and that consumers and Australian businesses are not left with a second-best or lowest-common-denominator approach. We welcome this first step. The government has laid the foundations for reform. We will watch closely in this and other areas what the states and territories allow to be built on those foundations.