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

I rise to speak in support of the Trade Practices Amendment (Clarity in Pricing) Bill 2008 because this bill will be welcomed by consumers and will provide consumers with a much clearer choice when purchasing products or services. The measures contained in this bill will clarify that when a business makes a representation to a consumer about the price of a good or service, to the extent that it is possible to do so, it must also disclose as a single figure the total price for that good or service.

In 2002 the Federal Court found that the existing section 53C of the Trade Practices Act 1974 did not require the disclosure of a single-figure price, provided that a total price could be obtained without the customer needing to perform a complex calculation. The court’s finding was inconsistent with the previous legal advice obtained by the government, as well as the ACCC’s approach to enforcing the provision. As we all know, consumers are not always familiar with the additional charges that often apply to goods or services and frequently find themselves paying more than they had expected to pay. Not surprisingly, during 2007-08 the ACCC received around 430 complaints relating to the existing section 53 of the Trade Practices Act.

The previous government undertook in 2006 two rounds of public consultation on component price amendments but never introduced legislation into the parliament. The Rudd government is now delivering on another important proconsumer reform that the previous government never had the courage to push ahead with. No longer will consumers feel ripped off when they suddenly discover that what they thought they were paying does not take into account hidden taxes and charges. In some cases that I have been made aware of, the extra taxes and charges can sometimes be more than the product or the service being paid for. Not only will this measure empower consumers to enable them to make a much better, informed choice but it will enable them to better manage their finances.

The bill, however, does not prevent businesses from using component pricing, provided that the total price is displayed prominently as a single figure. With all businesses expected to do this, the bill will not cause any disadvantage to any business. Of course, in some cases the businesses genuinely may not be able to know the total price in advance of the purchase. The bill makes provision for this scenario, albeit that the business is still required to advise that other charges may apply and to explain the nature of those charges.

Consumers look to government for protection in relation to their purchases, and both state and federal governments have a responsibility in consumer law. As we all know, consumers do not always read or understand the fine print that often accompanies purchase agreements. These documents are usually prepared by lawyers—I notice that I have to my left my colleague Mr Ripoll, who is a lawyer, and I say this with all due respect to him and to my other lawyer colleagues—with the objective of protecting the retailer or service provider and not the consumer. It is interesting that the conditions of the transactions are always in fine print and use complicated legal jargon. It is also noticeable that many retailers or service providers never take the time to fully explain to the consumer all of the conditions and the obligations expected of the consumer that are contained in the sales agreements. The only conclusion that I can draw from that is that the retailers or service providers in many cases do not want the consumer to know all of the conditions attached to the sale.

This is another example of clarity in pricing where quite often those conditions may not necessarily relate to the price itself but relate to other conditions attached to the sale where it would be in the interests of the consumer to be fully aware of just what they are purchasing, including the conditions, when they do make a purchase. I know that that assessment does not apply to all retailers and that many of them are honest and transparent in their dealings with customers. Regrettably not all are, and that is why we need consumer protection legislation.

On Saturday a constituent brought to my attention a brochure that it appears was deliberately ambiguous with the price of the products being marketed, in this case shoes, but when the constituent went to purchase the shoes at the price he thought appeared on the brochure, he was told the shoes were much dearer. On closer reading of the brochure—and I read the brochure carefully—I can understand how the retailer could claim that the price expected to be paid by the constituent did not apply to those particular shoes as they were displayed on the brochure. There are many other examples that I, and I am sure other members of this place, could refer to.

The vast majority of businesses that operate ethically will have no objection to these changes; in fact, they will welcome this bill, because it will probably weed out the rogue operators from within their industry. The consumers, however, will certainly benefit from this bill because it provides clarity and certainty in how much a good or service will actually cost them. I commend the bill to the House.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

It is a pleasure to be speaking on the Trade Practices Amendment (Clarity in Pricing) Bill 2008 because I think it is a core piece of legislative work for any government to undertake. I have noted, as will other speakers, that this bill is long overdue. In my eyes, it is something that could have been done many years ago but was not actioned. It is a great pity that consumers and ordinary people have had to wait so long to have this type of legislation put into place. I congratulate the Minister for Competition Policy and Consumer Affairs and Assistant Treasurer and the people who have worked on this bill. I think it will go a long way to improving consumers’ ability to make properly informed decisions about the price of goods that they purchase.

For a long time it has been commonly held that we have seen a range of business operators using language, advertising, marketing techniques and pricing with the all-too-common asterisk beside the price to lead people into a belief that that is the price that they will be paying when we all know that it will actually be much more. This is done in a variety of ways, from simple products which just have an advertised price with an asterisk which says, ‘Other fees and charges will be attached’, to the much more sophisticated and complex types of arrangements, where some unscrupulous operators will deliberately mislead consumers into believing that a particular price, the advertised unit price, is what they will pay when in fact it is not even close to that price.

Often those techniques are used to draw people in—just to get consumers to come through the door. Once they are through the door they have perhaps made that emotional commitment to buy a product they were interested in and figured it around a price that was advertised. Once they are in the door and have a slick salesman on their heels, they are convinced to purchase something that is either much more expensive or, by the time they have committed to buying that product with all the additional fees, charges and other elements that go with the price, in effect pay substantially more. Something needs to be done about that and this bill does that. Consumers do need to be protected. They need to be protected from unscrupulous businesses and unscrupulous practices, so I very much welcome this bill.

The bill does a number of things. Sometimes an advertisement carries a price—let us say it is the large-print price—which is not the full price, so there are other fees and charges. That might be appropriate, because there are circumstances where the final price cannot be determined properly until a consumer comes in and makes all their final decisions on what it is that they are purchasing. Buying a car is a good example of that. There is a base price and you know that there will be fees and charges, delivery costs and a range of things on top of that, so the final cost may vary. Consumers need to be properly informed about the unit price and then also properly informed about each of the other fees and charges and delivery costs that are associated, to make sure that they are entering into a decision to buy a product based on proper information that they have at hand. What our legislation does, for example, is make clear that, if a business advertises a large-print price with an asterisk indicating that there are other fees and charges, it must also carry the final price in the same size print and the same font. So there will be an equal balance between the advertised price—let us say the sale, gimmicky price—and the real price that consumers have to pay.

I am sure that I am speaking not only for my constituents but for constituents right across Australia and every consumer when I say that there is nothing more frustrating and infuriating than when you turn up to a particular business outlet with a newspaper clipping in your hand, quite excited about some bargain that you are going to get based on this wonderful, unbelievable advertised price. I am sure we have all had this experience. You are thinking: ‘This is almost too good to be true. This is what I want to buy; it’s exactly what I’m after,’ only to be massively disappointed when you are told what the real price will be and that you cannot get any colour you want, that you can really only get the colour white, for example—just plain—and that if you want it in any other colour it is going to cost you an extra thousand dollars, and so forth.

There are so many examples and circumstances where consumers are let down. That in itself may not be too bad a problem, some might say—that is, you are a little disappointed. The real issue and where consumer protection needs to come in—our role and why we need this legislative change—is when you go through that process, you have made some sort of emotional commitment and then you are convinced to buy it at the higher price. Basically, you have been scammed. That is where we need to come in. That is why the amendments in the Trade Practices Amendment (Clarity in Pricing) Bill need to take place. I know consumers will be exceptionally happy when they see advertisements now. They will have more confidence that the price that they are seeing is actually the real price.

This sort of problem exists in a whole range of areas, not just with the unit prices that we often see advertised. A particular issue that I know would have been raised with many members right across the country is that of mobile phone contracts and other telephony related contracts, where it is very difficult for anybody to comprehend just what it is they are buying and what the real costs will be. There are so many different elements to it that it becomes very complicated, very confusing. Somebody purchasing what they believe might be a $10 plan or some sort of simple service may end up paying substantially more—sometimes many, many times more than the original price they had intended to pay. I think it is important that we as legislators put in place a range of protections to ensure that consumers have proper access to information and a better understanding of the prices.

This will level up the playing field. I think it will actually be good for business, a real bonus. It will be a real benefit to small enterprises and small business, the backbone of the Australian economy, because it means that they will be on a better playing field. The smaller businesses do not have large marketing and advertising budgets or capacity, so it will put them in a better position against the large, big-business firms and against the unscrupulous players who sometimes take out these large-print advertisements carrying unbelievable prices.

Of course, it is not just about unscrupulous firms and situations where prices are outrageously advertised and are nowhere near the real price; sometimes it is just the smaller things. It can be just as simple as getting a haircut, going to a restaurant, buying a simple product on a daily basis. You ask the price and you are told the price, but by the time you have consumed the good, in whatever manner it will be, there is an additional fee. It has happened to me on a number of occasions. I know it has happened to friends of mine, and constituents have come and complained to me about it.

I think this is an even worse problem because the price is not or may not be specifically written down; sometimes it is just verbally told to you or it may be on a menu or something similar. When you go to pay the bill, there are additional charges carried on there that you were not told about, and you really are left with very little option or choice because of the embarrassment factor. I think that some unscrupulous businesses actually trade on the embarrassment factor. It is too late—the bill is there, so you are going to pay it, be embarrassed and argue about it or not check in detail if there are many different items that carry additional charges. I am sure there are not many of these businesses around Australia, but there are some where you buy the basic item but to have it brought over to your table, say, costs an extra dollar.

It is important that the message is sent through really strongly that we do not support that type of behaviour, that there needs to be clarity in pricing and that consumers need to understand and be fully informed of what it is that they are purchasing and for how much they are purchasing it. We saw that particularly become an issue when the GST was first introduced. Some business outlets were actually advertising the price pre-GST, or the price without the GST included, and then later were hitting people up for that extra fee. As we all understand, the price is the price and it should be inclusive of fees and charges where they are applicable.

Of course this bill will not apply to a range of areas. As a government we went out and consulted with people. This was not some sort of arbitrary decision-making process. We actually went out to the sector and to the community and undertook to ask for input to make sure that what we were doing met the standards and needs of consumers right across the country. Through that extensive consultation, a number of key changes to the previous government’s draft legislation had to be implemented, including things such as removing postage and handling charges from the scope of the changes.

The amendments in the bill do not apply to the Australian Securities and Investment Commission Act 2001, meaning that financial services are exempt. They also apply exclusively to business-to-business transactions. In most cases, the total price will have to be at least as prominent as the most prominent of any components of the price. Also, there is an exception to the ‘at least as prominent’ disclosure requirement for contracts for services where those services are provided for the duration of a contract either periodically or continuously and the contract provides for periodic payments. These are sensible changes and amendments which reflect that you cannot in all cases have a single price which is the final determined price and that there will be some form of negotiation in terms of a final price depending on the service or product and charges for things such as postage, handling and weight. So there are a range of important circumstances which we have accounted for in this legislation.

In the end, what this bill tries to do is very sensible. It is a common-sense and important change which will give consumers a fair go and make sure that people do not get ripped off. We have made sure that the regulatory framework is in place to protect them. I commend the bill to the House.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Trade Practices Amendment (Clarity in Pricing) Bill 2008 and in support of consumers both of Robertson and Australia-wide. It is my firm view that the protection of consumers in the marketplace is a fundamental policy priority for Labor, and I am pleased to see that we are acting in this particular case. A consumer is entitled to make a considered and informed decision in the marketplace about what products or services to purchase and at what price. Unless suppliers are required to clearly communicate the price of an item, consumers do not have the essential information to make a reasoned choice.

The bill before the chamber today goes to the core of this principle of consumer rights. Schedule 1 of the bill repeals the existing section 53C of the Trade Practices Act and replaces it with a new section which provides a prohibition, when supplying goods or services or advertising them, from making a representation of the consideration for the item that is only part of the price, unless that representation also indicates the total price with equal prominence. There is an exception in that the delivery price does not have to be included in the single price. Further, the section only applies where the goods or services are provided by businesses to consumers.

Schedule 2 provides three further minor technical amendments to the Trade Practices Act. They are: an extension of the act to cross-reference section 61 in relation to pyramid selling schemes, to clarify that the breach of notices under section 65E can be a criminal offence, and amendments that provide that state and territory trading laws operate concurrently with the federal legislation.

The core of this bill though is the idea that consumers, in order to make a properly considered decision, must have access to honest and clear information on the cost of the product or services that they are purchasing. A consumer is not honestly informed of the price of an item if they do not know what the total cost is. This amendment, within the range of consumer legislation, is aimed at assisting consumers to make better purchasing decisions by providing them with this better information. Policies that assist consumers to be better informed and confident consumers also assists in invigorating competition which, in turn, encourages efficiency and innovation. This type of problem is common in the sale of cars and other desirable consumer items such as computers, large-screen TVs, holidays and travel. These types of sales are often coupled with complex finance arrangements which make it even more difficult for consumers to determine the true final price of the item. After listening to previous speakers, I have to say that this sort of trick is often used to engage consumers emotionally in feeling committed to the wonderful experience of having that wonderful holiday: thinking they can afford it, committing themselves emotionally and then finding it is beyond their capacity to pay for it. That is a very sad situation because many people, once emotionally engaged, go on to purchase the item, commit themselves financially and then find they have difficulties paying, which can often lead to quite dire results.

The main intention of this bill is to rectify a failure in section 53C of the Trade Practices Act which was introduced by the previous Labor government in 1986. The original intention of the section was to prohibit a corporation from advertising part of the consideration payable for goods and services without disclosing the full price. The intention of this section was undermined by a Federal Court decision in 2002—that is, the Australian Competition and Consumer Commission v Dell Computer Pty Ltd. The case determined that the advertising of a price that showed the component parts of the price and not the total was not a breach of the previous section. I note that it is somewhat ironic that the component part was actually in relation to delivery costs of the Dell computer. In fact, in this particular piece of legislation we have allowed the delivery costs to be left out. But notwithstanding the detail of the decision, it did have the effect of undermining the true intention of the section.

The effect of this decision was that suppliers of goods and services were free to show a price for an item as components and there was no necessity to show the total price. The entire rationale of the section as originally carried by the parliament was undermined. The previous, coalition government made reference to this problem in 2005 but, other than the release of a draft amendment to the Trade Practices Act, took no further action. It seems that after opposition from the business community, the then Parliamentary Secretary to the Treasury, Chris Pearce, sent the proposals off to the Productivity Commission for an inquiry that was to take up to one year. He probably considered it likely that action would be precluded by the intervention of an election. And that is, in fact, what took place. Unfortunately this is often the view of the coalition: that action to protect consumers is not a particularly high priority. I am pleased that this government has taken action to remedy a problem that has been apparent for some years. For Labor, the protection of consumers is important and I look forward to further action in this area from the minister, Chris Bowen.

Another area of consumer law, or unequal relationships between consumers and a supplier of goods, that I believe needs further examination and action is in the situation where unreasonable and one-sided contract terms—the so-called unfair terms—are imposed on a weaker party by a party with greater power. This can arise in a situation where a consumer with a credit contract or a mortgage is dealing with a bank or finance company or a consumer is negotiating a mobile phone contract. It also may happen where a small business is dealing with a large retail landlord or a franchisor.

This area of unfair terms has been identified as being an area of deficiency in our consumer law by the Productivity Commission report released in April this year titled Review of Australia’s consumer policy framework. In my view, it is an area that cries out for greater attention and further protections for consumers and small businesses dealing with larger businesses. It is more and more the case that corporations are combining with others, becoming larger and becoming national. In many industries the businesses are becoming so large and extensive that national corporations now provide 50 per cent of consumer needs in Australia. Further, in some industries such as communications, companies that operate nationally supply 90 per cent of this type of product for Australian consumers. They have a tendency to have a standard contract and the option for the consumer is to take it or leave it.

The concept of a consumer and supplier negotiating on an equal basis is a mythology. Have you ever contacted your bank prior to signing your mortgage and asked to vary the terms or tried to negotiate a lower rate for international roaming with your telco? Generally you are offered a product and your choice is to accept or reject it. The inclusion of unfair or unreasonable terms most commonly arises in these ‘standard form’ non-negotiated contracts. The worst examples allow the more powerful party, generally the supplier, to vary essential terms at will. This is most commonly seen with financial contracts such as mortgages, where banks can vary interest rates at will. If most people had a close look at their mortgages, they would find that the bank can actually call in the loan at any time.

The introduction of consumer protection legislation in this area of ‘unfair terms’ has already occurred in Victoria and also in overseas jurisdictions such as the United Kingdom and the European Union. To date the ministerial council has not yet determined an appropriate regime in this area, but I am sure that with greater consideration such a scheme can be identified. In this more and more globalised and corporatised world, the arguments are strong to protect consumers from the abuse of unfair terms. This means that supplying businesses that are in a very powerful position and are highly unlikely to willingly negotiate with individual consumers will be able to be called to account for unfair terms. I hope this is an area the minister will take action on. Meanwhile, I congratulate the government on this initiative and urge the support of the chamber for the bill.

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I support the Trade Practices Amendment (Clarity in Pricing) Bill 2008 because it is a matter of common sense that to the greatest extent possible Australian consumers ought to be able to rely on an advertised price as representing the full price of any promoted good or service. One could go further and say that, for a market economy to work efficiently, consumers must be in a position to accurately assess the comparative prices of goods and services, so that the demand for goods and services is properly determined by relevant supply, cost and margin factors, as represented in the accurately advertised price, rather than by some kind of pricing obscurity.

This bill amends the Trade Practices Act to deal with an interpretation by the Federal Court of section 53C and its requirements as far as price disclosure is concerned. The need for the amendment contained in this bill has been spoken to eloquently by the number of complaints to the Australian Competition and Consumer Commission. These complaints have focused on the practice by some businesses of advertising prices that are in fact significantly less than the total price of a good or service, by excluding certain taxes and fees. The previous government examined the component pricing issue in two rounds of public consultation and outlined draft legislation to deal with the problem in 2006. However, nothing came of it—there was no action.

The effect of this proposed amendment is quite clear. Where a price for a good or service is provided or represented to consumers, it must be presented as the total price of the good or service to the extent that it is possible to do so. While component pricing is still available as an option to businesses, where a component price is presented, the total price must also be clearly displayed, and the total price must be presented at least as prominently as the most prominent of any of the displayed component prices.

As an amendment that governs pricing conduct, this bill has no significant financial impact on Commonwealth expenditure or revenue. Its impact will be on individual Australian consumers, who will be able to make financial decisions with greater knowledge and confidence, and on the Australian market as a whole, which will become more properly responsive to true price signals.

As with any regulatory change, this bill takes into account the realistic concerns of Australian businesspeople. The new price disclosure requirements will not apply to the provision of financial services, which is covered under section 12DD of the Australian Securities and Investments Commission Act 2001, and will remain so covered out of recognition that total price disclosure cannot feasibly or accurately be made in respect of many financial services. Similarly, postage and handling costs have been excluded as a component that must be disclosed in the total price, for the reason that this would place an unreasonable compliance burden on many businesses and because postage and handling are generally understood by consumers as constituting a separate service with an additional and separate cost.

When one considers the benefit of total price disclosure, and then takes into account the regulatory nuances I have already mentioned, it cannot be argued that this amendment does anything other than require Australian businesses to operate with the kind of price clarity that the man and woman in the street, and the vast majority of Australian businesses, would already regard as right and proper conduct. In discussing this bill over the last few days with friends and with constituents, it has been interesting to note how many people assume that the requirement for total price disclosure already exists or is implicit in the Trade Practices Act.

It is also relevant, in my view, to note that the pricing clarity required by this amendment is no different from or more onerous than the kind of precision we require in numerous areas of Australian social and economic life. We require extensive financial information disclosure from publicly listed companies; we require accurate GST input and output information from small- and medium-sized Australian businesses; and of course we require Centrelink clients to report their income, in detail, fortnightly. If you are asked to provide your gross income for a family tax benefit estimate, you are certainly not entitled to put the net figure and then hide an asterisk somewhere on the bottom of the page. Indeed, there would be very serious penalties for doing so. Yet you only have to go online or pick up the travel section of the newspaper to see a very generous pepper-grinding of asterisks around, or at least in the vicinity of, the advertised prices. This Tuesday’s edition of the West Australian contained ads for car rentals, health insurance and travel products—all of which failed to display the total price for obtaining the proffered good or service.

I would like to briefly address some of the comments that have been made in relation to this bill. I note that in the opinion of the Business Council of Australia there is an ‘absence of a clearly articulated problem at which the proposed amendments are aimed’. I think the problem can be clearly articulated. The problem is that some businesses, whether intentionally or otherwise, are misleading Australian consumers by advertising prices that are significantly lower than the total price which the consumer will, in reality, have to pay. The Business Council has also suggested that there would be ‘practical problems associated with businesses attempting to comply with these provisions’. However, when you consider the way the amendment is calibrated, with sensible exemptions and limitations of coverage, and when you consider the number of businesses that already comply—often in the same industry as those who do not—it is hard to see the Business Council’s position as being anything other than a reflex anti-regulatory stance.

This government is well aware that a market is not some naturally occurring phenomenon. As demonstrated in recent times by the global economic crisis, markets are created and shaped by humans. They work more or less fairly, more or less efficiently and more or less stably as a result in large part of the quality of the regulatory framework that governs them. This government is not afraid of taking action to make the regulatory framework better. While in many cases this may well involve reducing regulation, in this case it requires a small but significant change to deliver fair pricing transparency for Australian consumers.

This bill has received strong support from CHOICE, one of Australia’s most significant consumer advocate groups. Indeed, CHOICE campaigned for this change for years before the former coalition government finally released its draft legislation in 2006. But then, having reached the draft stage, the previous government went no further. In these circumstances, for the shadow minister for health and ageing, the former shadow minister for finance, competition policy and deregulation, to claim that the Rudd Labor government has merely copied coalition policy is patently ridiculous. How can legislative action be regarded as copying inaction?

The Consumer Action Law Centre has also recognised that the proposed amendment bill is well written and practical. Its submission in response to the draft legislation highlights the practical nature of the changes. Consumer Action supports amendments to the act that increase consumers’ access to easily understood information about goods and services. Requiring a single price for goods and services will provide important price information to consumers.

We support the general thrust of the amendments and believe that generally the draft legislation is well prepared and the draft explanatory memorandum clear and useful. This amendment bill is tailored carefully so as to create a fairer market environment for consumers and a fairer competitive environment for the vast majority of honest businesses. Importantly, it will achieve these things without creating an unfair compliance burden.

I conclude by returning to my first point: that the clarity or transparency in pricing that is required by the amendment to the Trade Practices Act contained in this bill is a matter of common sense. All things being equal, goods and services should be advertised at the total price required to obtain them. Many Australians would assume that this is in fact already the case. I am sure that this is partly why so many complain to the ACCC when they find that it is not so. Most Australian businesses operate on a total price disclosure basis and they will be rightly supported by this bill, which will require their competitors, some of whom have behaved unscrupulously, to meet the same fair and honest standard of pricing clarity.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

I am pleased to express my advocacy for the Trade Practices Amendment (Clarity in Pricing) Bill 2008. The Rudd government is achieving another valuable proconsumer reform that our predecessors never had the courage to press forward with. The Rudd government believes in taking decisive action in the national interest, as evidenced yesterday with the announcement of the $10.4 billion Economic Security Strategy to strengthen the Australian economy in the face of the worst global financial crisis in modern times. The $10.4 billion strategy will buttress the national economy and support Australian households, given the risk of a deep and prolonged global economic slowdown.

Our economy is strong and we remain better placed than other nations, but Australia is not immune from the global financial crisis. In the midst of the global financial crisis, the Rudd government is taking decisive action to strengthen the Australian economy. Our government’s $10.4 billion Economic Security Strategy contains five key measures: $4.8 billion for an immediate down payment on long-term pension reform; $3.9 billion in support payments for low- and middle-income families; $1.5 billion of investment to help first home buyers purchase a home; $187 million to create 56,000 new training places in 2008-09; and the acceleration of the government’s three nation-building funds, bringing forward the commencement of investment in nation-building projects to 2009.

I am particularly pleased that we will deliver a $4.8 billion down payment on pension reform for Australia’s four million pensioners, carers and seniors, providing them with immediate financial help in the lead-up to comprehensive reform of the pension system. The Rudd government will not pit pensioner groups against each other, and we have not sought to exclude two million carers, people with disabilities and married pensioner couples from this payment ahead of the longer term reform, in stark contrast to the opportunistic resolutions raised by the opposition in recent weeks. These payments recognise the additional costs also that single pensioners face relative to couples, and for the first time lump-sum payments are being extended to include disability support pensioners, which I regard in my portfolio area of disability services as a fantastic development for all people with disabilities.

Indeed, one thing we are trying to do in these difficult times is ensure that consumers, particularly those that are assisted by the $10.4 billion economic security package, benefit from the Economic Security Strategy and are not injured by virtue of lack of consumer protection when they purchase goods and services. The government is resolute about empowering consumers and reinforcing the consumers’ right to know the total price of a good or service. We want to ensure that consumers are not fleeced when they discover that what they thought they were paying does not take into account hidden charges and prices and taxes. The changes in this bill mean that consumers will know the total price they need to pay for the goods and services they buy.

This government rejects placing an undue burden on business or trying to fix a problem that does not exist. However, following the government’s undertaking of extensive consultation through both submissions and follow-up meetings with business and consumer groups, there are key changes to the previous government’s draft legislation. These include removing postage and handling charges from the scope of the changes; making sure that the amendments do not apply to the Australian Securities and Investments Commission Act 2001, meaning that financial services are exempt; and making sure that they will apply exclusively to business-to-business transactions. In most cases the total price will have to be at least as prominent as the most prominent of any components of the price. An exemption to the ‘at least as prominent’ disclosure requirement has been made for contracts for services where those services are provided for the duration of the contract either periodically or continuously, and the contract provides for periodic payments. Businesses will not be prevented from using component pricing, providing that the total price is also displayed prominently as a single figure.

The Consumer Action Law Centre is a nationally recognised consumer advocacy, litigation and policy organisation. It has welcomed the government’s bill. The Consumer Action Law Centre has said:

Consumer Action believes that the amendments proposed … will ameliorate some of the market distortions and anti-competitive effects of traders advertising component prices and not the single price.

Consumer Action supports amendments to the Act that increase consumers’ access to easily understood information about goods and services.

To further quote the centre’s submission:

Requiring the single price for goods and services will provide important price information to consumers. We support the general thrust of the amendments, and believe that generally the draft legislation is well-prepared, and the draft explanatory memorandum clear and useful.

The previous government attempted to do something on component pricing. On two separate occasions in 2006 they outlined draft legislation that, unfortunately, I have to report, fizzled, fell through, foundered and came to nothing. This government has taken on reform in an area where the previous government acknowledged that there was a problem and talked about the changes but left the job unfinished. Identifying an issue achieves little unless you persevere to bring about change.

Let us have a look at some of the things that the Rudd government has already done for consumers. The first move this government made was to relax foreign investment rules to make it easier for the likes of foreign companies such as Aldi to set up more shops and create more competition in the market. During the last session of parliament, the government introduced the biggest package of reforms to the Trade Practices Act in 22 years. It includes provisions to promote competition and protect smaller retailers from predatory pricing. The government is moving on the key recommendations in the ACCC report into the price of groceries. The government will execute its plan in response to the ACCC inquiry as a matter of urgency by, firstly, referring the anticompetitive impacts of state and local zoning and planning laws to the COAG—this is about getting more competition in more communities, to put downward pressure on local food prices; secondly, considering the best way to introduce a mandatory, nationally consistent unit-pricing regime in consultation with industry and consumer groups; thirdly, and very importantly, working with the horticultural industry on improvements to the horticulture code of conduct; and, fourthly, implementing a creeping acquisitions law, following feedback on a discussion paper to gauge the best way forward.

I think the real question for the coalition is the dubious integrity of their response on issues that affect the consumer. Why are they so opposed to measures such as unit pricing that increase transparency and provide more information to consumers? These are important reforms that the previous unlamented government could or would never deliver, and now they seek to block these reforms in the Senate and exact payback from the consumer watchdog. The Rudd government and modern Labor believe in competition, transparency and empowering the consumer.

Across our eastern capital cities it was previously all a guessing game as to where motorists should go for the lowest petrol prices. Now Fuelwatch has put some power back in the hands of motorists. The government does not, nor should it ever, apologise for backing the Australian motorist against the big oil companies and the interests they represent. I believe the Leader of the Opposition should drop, on behalf of the opposition, their blatant support for the vested interests in the petrol market and let Fuelwatch through the Senate. We want motorists to enjoy the benefits of greater information before they drive away for Christmas. The other side, it would appear, would prefer to back the oil companies.

This government also should make no apology for siding with consumers by putting more information about grocery prices in the public domain. On 5 August this year the government announced the establishment of its GROCERYchoice website. This provides consumers with practical grocery price information not previously available to consumers that will assist them to compare general price levels for a large number of products in different regions. Each month the site publishes the prices of a typical grocery basket from supermarket chains located in 61 regions across Australia. I believe this site puts some public pressure on the major retailers to be the cheapest outlet. In July Coles was cheaper than Woolworths in a total basket of products in 52 of the 61 regions. I think that sends a pretty clear message. Furthermore, Aldi is cheapest in the basic staples basket in the regions it is operating in by about 20 per cent.

What is it about this information that the Liberals would seek to withhold it from the Australian public? This legislation, along with the range of measures I have spoken about, demonstrates that the government is allowing consumers to make more informed purchasing decisions to promote more vigorous competition between different large organisations. It is the increased competition, from supermarkets to oil companies, that can put downward pressure on all these prices. For these reasons I support this legislation as another example of the ongoing crusade by this government to put information in the hands of consumers and therefore power in the hands of consumers.

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

in reply—I thank all honourable members who have contributed to this debate on the Trade Practices Amendment (Clarity in Pricing) Bill 2008. I note that the opposition was represented by the honourable member for Cowper and the government was represented by a very long list of speakers. This is an important piece of legislation which provides for consumers to be told exactly what they will pay when they make a purchase. I say at the outset that I agree with the member for Cowper, who in his remarks said:

Overall, I believe that these amendments will have a positive impact on consumers. Without burdening businesses with high compliance costs, this measure will provide consumers with better information about the products and services they wish to purchase. It should also close the loopholes opened by the 2002 and 2003 court cases, and make pricing more transparent.

I certainly agree with the member for Cowper and that has been the government’s intention.

Drafting this legislation has not been easy. The objectives of the legislation are clear, but unintended consequences are also clear. It has been necessary to engage in a very extensive round of consultation not only with consumer groups but also with industry groups. I think that the balance the government reached in the legislation we put to the House is the right one. Consumers by and large understand, for example, that when they buy a good which requires it to be posted to them there will be postage and handling costs. This legislation strikes the right balance on the matter of postage and handling. I received a number of representations from internet sellers in particular about the problems that would be created and the unintended consequences of requiring the compulsory disclosure in a single price of the postage and handling cost when postage and handling is an option—when it is not necessary to have the good posted to you. So we have struck the balance of requiring postage and handling cost to be disclosed where it is not an option, where it is compulsory, but allowing separate disclosure of postage and handling cost where it is optional.

Likewise we received a lot of representations that financial services were not appropriately covered by this legislation, and on balance I agreed. Where you have financial services there are issues of disclosure and they are best dealt with through specific legislation, not through the general application of component pricing to financial services.

Similarly I received strong representations from various companies involved in service provision over a long period of time, pay television being a prime example, where you pay for a contract over a period of time but there is a monthly fee. By and large, I think Australian consumers understand monthly fees. They understand that if you take out a contract for a pay TV service, for example, and you pay a certain amount per month plus an installation fee, it will equate to an amount over the total minimum period of the contract. We have struck the right balance again, and that has been welcomed by those groups.

What is important about this legislation is that it deals with those unscrupulous sellers. It deals with those who have attempted to mislead their consumers, whether they be big or small. It deals with airfares being advertised free of government taxes and charges and other compulsory costs which add significantly to the airfare. No longer should people see an airfare advertised for a certain amount and think it is a very good price and, when they purchase it, find that it costs much more. Similarly, there has been a lot of concern in the community about dealer delivery fees and hidden costs and charges that are imposed when people go to buy vehicles. It is not just those two industries, but they are clear examples.

What the government has tried to do is to protect consumers without imposing an unfair compliance burden on those businesses doing the right thing. I think we have struck the right balance. This legislation has been broadly welcomed by consumer groups. It is true that there are some consumer groups who have asked us to go somewhat further, but we have struck the right balance. It has also been welcomed by and large by business groups. It is true that there are some business groups who say we have gone too far, but again I believe that we have struck the right balance. I think that the contributions from both sides of the House—the member for Cowper, who was the only contributor from the opposition, and all the government members who spoke on this bill—indicate that the House also agrees that we have struck the right balance.

This is legislation which was flagged by the previous government back in 2002 and 2003 as a result of various court cases, but the previous government did not actually introduce the legislation. I suspect that is because those vexed issues which this government has had to work through were too difficult to be worked through. We have taken the approach that this is urgent and that it is required to protect consumers but that the issues that have arisen during the consultation have been genuine and have needed a genuine approach to find the right solution. I believe we have struck the right balance, and I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.