Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

When I was interrupted yesterday, I was following the member for Oxley and I commented that last year the committee that the member for Oxley chairs looked into sustainable long-term practices in franchising. He did a very good job of that. It is a pity that that was completed last year and we still do not have a response from government. I think there is an urgent need to do something about the parlous state of franchise agreements in this country. The government is, frankly, dragging its heels. We have a perfect opportunity in the Trade Practices Amendment (Australian Consumer Law) Bill 2009, which we are debating today. I understand that initially the Minister for Competition Policy and Consumer Affairs, Chris Bowen, and federal cabinet had agreed that both consumers and small businesses would be covered by the proposed new unfair contracts terms framework. Of course, this has not happened. Minister Emerson decided to remove small business from the unfair contract proposal. I personally find that very disappointing. From the evidence that was given to the committee which looked into franchise agreements, it is very clear that there is a pressing need to tidy up the arrangements between franchisors and franchisees.

The initial instinct to include small business in this legislation was right, I think. That was certainly supported by Associate Professor Frank Zumbo, from the University of New South Wales. Large corporations can, not just in the franchising sector but in other sectors, have considerable power over small contractors. This can impact on small businesses in terms of retail leases, franchises and supply agreements. When the exposure draft came out, the Productivity Commission supported business-to-business contracts as well as consumer contracts being included in this legislation. They said:

Small businesses have a dual role in consumer policy: as well as being suppliers of goods and services, they are consumers in their own right. Indeed, in their dealings with larger businesses, small businesses can face many of the same issues as individual consumers, particularly relating to unequal bargaining power and the lack of resources to effectively negotiate contracts.

It is certainly clear that by not including business-to-business contracts in this legislation small businesses are the losers.

When this matter went to the Senate, it is true that a variety of views were expressed by senators, but Senator Eggleston, who chaired that Senate committee, observed that Western Australia had voiced its opposition to the minister’s decision to remove business-to-business contracts without consulting with the states, which would appear to suggest that the government may not have engaged in adequate consultations with the states through the Council of Australian Governments process.

I support this bill, but I find that small business has been left out of the equation. There was some talk about the fact that there had not been time to consider the inquiry into franchising and another inquiry that is going on, but I would put it to you, Mr Deputy Speaker, that the inquiry into franchising was finalised around October last year and there has been plenty of time to make sure that those issues that were raised, particularly with regard to franchising, are addressed in this bill in the business-to-business contracts provisions.

In any event, going back to the essence of this bill, as business operations grow, inevitably more businesses are also turning to standard form contracts for time and cost efficiency. Standard form contracts are a powerful business tool which makes doing business simpler for both business and consumers in many instances. However, because they are contracts which are not negotiated between parties and are offered on a take it or leave it basis, there is potential for consumers to be disadvantaged by unfair contractual terms. This concern is exacerbated, as the evidence suggests that for many consumers the thought of reading, let alone comprehending, a contract that has been designed to cover all situations is all too much. Standard form contracts are commonly used in the sale of everyday products from telecommunications and energy to car hire and software sales. Whilst I think Australia has made very good protections for Australian consumers, there are, as the Productivity Commission noted in its 2008 Review of Australia’s consumer policy framework, which I just referred to, definite areas with room for improvement. It says that the protection of consumers from unfair terms in standard form contracts is one such area.

The bill has been a long time coming. There has been extensive debate and many rounds of consultation, albeit short ones. A number of concerns have been addressed, but there are still some troubling aspects that are causing anxiety to the Australian business community. There can be no doubting the significance of these changes, and it is important that we take the time to get them right before they are unleashed onto the business community, with far-reaching consequences. Our shadow minister has, quite rightly, put forward some suggestions as to how this bill might be improved. We definitely need to have consistency, but this does not have to result in complexity.

As we seek to legislate against unfair contractual terms, it is necessary to first consider what is actually meant by ‘unfair’. It is the kind of term that is by its very nature subjective, meaning different things to different people. In the context of this legislation, it refers to contractual terms which cause a significant imbalance between parties’ rights and obligations and where such a term is not reasonably necessary to protect a legitimate business interest. In the current Victorian equivalent there is no reference to the protection of legitimate business interests and the focus is instead on whether the term is contrary to good faith. Where a term is deemed to be unfair, it will be rendered void and the contract will continue to bind the parties as though the disputed term never existed, although in some cases where an essential term is found to be unfair the contract will no longer be operative.

It is important to consider at this point that the court is compelled to consider both the rights and obligations of the parties to a contract. In isolation, a term may seem unfair but the contract may also provide the consumer with considerable rights elsewhere. This has a notable impact where consumers view that a term imposing an additional charge is unfair. However, in many instances such a charge will only arise where a consumer exercises one of their rights under the contract. This matter was considered in the recent case of Jetstar v Free, where the Victorian Supreme Court considered the state legislation and found that the additional charge was related to a customer exercising their right to vary passenger details on an air ticket purchased at a discounted price—no doubt a case that is familiar to you, Mr Deputy Speaker. Consumers and businesses alike must take a holistic approach to interpreting the contract, as this will ultimately determine if the single term is considered unfair.

Where the contract must be considered as a whole, it is utterly inappropriate that, by regulation, a minister is able to prescribe prohibitive terms. The power to create per se prohibited terms is unsuitable and unnecessary. Within the last six years that the Victorian law has been operating this prohibition power has not been used. As I mentioned, it is the contract as a whole and the context in which it operates that will determine if the term is unfair. A term that is unfair in some circumstances, as I said, may not be in others. Allowing a supplier to unilaterally amend service provisions may be more acceptable in some industries than others. The power to prescribe prohibited terms should be removed from the legislation to ensure that the decision as to whether a term is unfair is made in the context of the contract as a whole.

Most businesses are willing to accept these changes but it would seem that one of the greatest fears is that they are going to be exposed to a new wave of disputes. I think that is a very real fear—having to expend considerable time and energy to defend claims that can be instigated by a disgruntled consumer under a low threshold in this legislation. It is not right that businesses have the onus of proof in terms of proving both that the disrupted contract is not a standard-form contract and that the term is reasonably necessary to protect their legitimate business interests. I have always had a bit of concern about turning the onus of proof rule on its head, and it does give me some concern in relation to its application in this bill to small businesses.

In their submission to the Senate inquiry into the legislation, Brambles noted that the unduly low threshold for bringing a claim was likely to result in a significant number of unmeritorious or frivolous claims. We saw this kind of caper—when I first came into this parliament—over unfair dismissals and, on speaking to some authoritative people, there were a number of frivolous, unmeritorious claims that locked small business up in long hours of preparing to defend their position. I think we always have to make sure that we balance off the tensions between the responsibility of small business to consumers and the difficulties they face from frivolous claims. I can understand the rationale for reversing the onus of proof, in that business will have better access to information to defend the claim than a consumer may have to make it. However, such a position exists elsewhere in law and I believe the greatly extended investigative powers of the regulators will be able to override the necessity for these presumptions. We risk doing more harm than good if the presumption remains.

Given the significance of the proposed changes and the number of amendments that have been made—and hopefully will continue to be made—since the draft exposure was first released, businesses will be under a great deal of pressure to make the necessary changes before the proposed starting date of 1 January 2010. David Bell, the Chief Executive Officer of the Australian Bankers’ Association, has said that the start date is simply unworkable because of the extent of the changes that need to be made, all in the context of other far-reaching legislative changes such as the new credit protection package. This change is not necessarily because there is the extensive use of unfair terms, but rather because changes to the computer system, staff training and arduous reviews will need to take place.

Clearly, we would like to be able to protect consumers as soon as it is possible but it is in the best interests of all involved that the transition to this new legislation be smooth and well-informed. A start date of 1 July 2010 will mean that businesses have a reasonable period of time to review their procedures.

This debate also highlights the need for consumers to be aware of the contracts they are signing. We need to encourage businesses to further embrace the trend of using clear, readily understandable language in their contracts. At the moment many consumers do not bother to read their documents, because the language is intimidating and confusing.

Australian contract law is rooted in the history of freedom of contract. While parties may not always be of equal bargaining power, they are free to enter into any contract so long as it is not illegal. For the sake of business efficacy, the contracts that we make need to be upheld. Consumers need to be empowered so they do not enter into contracts they do not understand, and that has undesired consequences. If businesses do not have confidence in the contracts they sign, this risk will be passed onto the consumer. If consumers do not have confidence to read and compare contracts then the market is ultimately impaired.

Consumer protection laws are undoubtedly necessary because of a small number of operators who rely on unfair contract terms but it is equally necessary to educate consumers as to the choices available to them. No doubt, Mr Deputy Speaker, like me, you come across cases fairly regularly within your constituency. I recall one such case recently where a rather elderly person had entered into a financial contract. The legal requirements are that the bank has to get them to sign that they have received both legal advice and financial advice that is independent. That advice was sought. It was a very complex kind of contract. The advice, no doubt, was lengthy and difficult to understand. This person entered into the contract, to later on find that the circumstances had changed and that there was a very severe penalty attached to breaking this contract early.

So there is a great need to educate the consumer, to make sure they understand what they are signing and if they do not understand it to seek independent advice so that the terms of the agreement are absolutely clear and they know, for example, what the penalties might be if they decide to break the terms of that contract early and the various other circumstances that present in contract law. Having been involved in teaching contract law as it relates to property for many years, I know the difficulties and the many complexities of such contracts. It is not easy for people who have even a very good education to find their way through those contracts with ease.

Ahead of us is a far-reaching reform process for a raft of different consumer protection laws, and this is the first step. Businesses and consumers must have confidence that the process will be rolled out with enough time to adjust if the rest of the reform agenda is to be implemented. There seems to be widespread support for the legislative aims behind these changes. There is a strong bipartisan approach to protect consumers from the few businesses that may disadvantage consumers by relying on unfair contract terms. We should recognise that most businesses value repeat business. They want to do the right thing by consumers but, as always, a few spoil it for the whole and that is why we have the job that we have to do in this place—that is, to review the law at regular intervals and alter it accordingly. (Time expired)

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

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

I rise today to speak in support of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 The desire for a national consumer framework and provisions to restrict unfair contracts was canvassed by the Labor Party more than a decade ago, but this policy agenda was not a priority for the Howard government.

In October 2008, the Council of Australian Governments agreed on the vital necessity for Australia to move boldly and comprehensively towards a national consumer policy framework. It was also agreed by COAG’s Business, Regulation and Competition Working Group that this be done with the close cooperation of all the states and territories. It has been formulated in equally close consultation with the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission. The reform measures put forward in the bill represent a central element in the COAG reform program that will deliver a seamless national economy for Australia. The changes presented here are a generational change in consumer law and policy in Australia. They are the first step towards an Australia-wide, seamless economy.

In brief, the new bill before us today will introduce a national unfair contract terms law. It will also provide the ACCC and ASIC with a new framework of penalties and enforcement powers. The two regulatory bodies will also have the powers to enforce new consumer redress options. Unfair contract terms laws exist today in many jurisdictions, including the UK, the EU, South Africa and Japan. Unfair contract laws exist in the US and in Canada.

Under the current regime in Australia, a number of consumer protection measures exist in various Commonwealth, state and territory laws. There are many broad similarities in these laws. However, over time, significant differences have begun to emerge between consumer laws in the various jurisdictions across Australia. This has had the effect of creating confusion for consumers as well as increasing business costs across the board. There are in fact 13 different consumer protection regimes operating across Australia at the present time. The Australian consumer law regime will for the first time be amalgamated into one national system of consumer law. This national consumer law framework will promote consistency and protection across all Australian jurisdictions. This framework will reduce multijurisdictional complexity and result in lower compliance costs for businesses operating nationally.

National consumer laws are a vital first step to creating a seamless national economy, a reform goal that has been championed by the Business Council of Australia. It was also a goal endorsed by the 2020 Summit held last year. The Productivity Commission has estimated that reforming Australia’s consumer protection laws will save the national economy up to $4.5 billion per year. This is an important saving, but it is equally important to remember that the bill will also give added protection to consumers. It will also make the law clearer, easier to implement, more transparent and more accountable for all parties who use contracts to conduct some element of their personal and business lives.

The Australian consumer law bill will amend the Trade Practices Act 1974 and make corresponding amendments to the Australian Securities and Investments Commission Act 2001. The reforms will be implemented through an application law scheme which the Australian government and the states and territories have agreed to implement for consumer protection and fair trading. The single national consumer law will be called the Australian Consumer Law. It introduces changes that will make life easier for all consumers through clearer, fairer standard form contracts. It will also provide for more effective enforcement of our consumer laws.

One of the primary reforms under the bill is the introduction of the national provisions regulating unfair contract terms. Under the bill, the new national unfair contract terms provisions will apply only to standard form contracts entered into during business-to-consumer transactions. Regulation of business-to-business transactions will be reviewed as part of an ongoing reform process of the Trade Practices Act and the Franchising Code of Conduct. However, sole traders are included in the scope of the current bill because, for many of them, business and personal interests are often identical when entering into transactions or contracts.

The new unfair contract terms provisions will provide protections for consumers. Consumers will have greater choice, a greater ability to seek alternative options and more ability to accurately assess the risks of signing a particular contract. Businesses will also have to assess their risk properly and will no longer be able to exploit their stronger bargaining position to transfer all of the risk to consumers.

Put simply, a term in a contract will be void if it is unfair. It will be deemed unfair if there is a significant imbalance in the parties’ rights and obligations and/or the term is not necessary to protect the legitimate interests of the supplier. In determining whether a contract term is unfair, a court will determine whether the term has a ‘substantial likelihood of detriment’ to one party. In order to take an action, the claimant does not have to prove that actual detriment has occurred but only that there is a substantial likelihood of detriment occurring under the terms of the contract. Detriment includes both financial and non-financial detriment.

Contract terms must also be transparent. The view that, if something is disclosed, it is therefore all right and beyond reproach no matter how unclearly or obscurely the information is presented is no longer sufficient as a consumer safeguard. This old concept of caveat emptor is no longer an appropriate assumption in a complex modern world of business and contract law. Any lack of transparency is a strong indicator of unfairness.

In assisting regulators to decide the fairness or otherwise of terms contained in contracts, a non-exhaustive, indicative list of unfair terms has been developed. This so-called ‘grey list’ gives examples of terms which may be considered unfair. The ‘grey list’ does not prohibit the use of terms in contracts but it can be used for guidance in assessing the fairness of agreements entered into in business to consumer transactions. While certain types of terms may be prohibited in standard form contracts, it has been decided that specific terms should be not be prohibited at this time. However, this issue will be kept under review and the position may potentially change. The bill does not precisely define a standard form contract, but it does provide a set of considerations to be taken into account when assessing a contract’s fairness. One of the matters excluded from the unfair terms test is the main subject matter of the contract—for example, the upfront price payable under the contract. A consumer, for example, cannot be allowed to purchase goods, services or land and renege on the contract just because they later decide it was not a good deal or a good price.

The Australian consumer law bill will provide the ACCC and ASIC with a broad range of nationally applicable powers to enforce the new laws. This will ensure that consumers are protected fairly and uniformly across the nation. Under current arrangements, the ACCC and ASIC have been hampered by inadequate powers to deal with harmful and exploitive business practices. In many cases, the states and territories have had wider powers in this regard. The ACCC and ASIC will be able to seek civil pecuniary penalties and disqualification orders and to issue infringement notices, substantiation notices and public warning notices. These regulators will also be able to seek redress for consumers not party to enforcement proceedings.

The civil pecuniary penalties will now apply to breaches that can currently only be punished by criminal sanctions and for breaches of the unconscionable conduct provisions of the Trade Practices Act and the ASIC Act. These penalties will be serious, with maximum penalties of up to $1.1 million for corporations and $220,000 for individuals. The ACCC and ASIC will be empowered to disqualify people in breach of the consumer protection laws from being a director of a company. The regulators may also issue substantiation notices, requiring traders to produce documents or other information to substantiate claims they have made in their business or contractual dealings. Substantiation notices can also provide the regulators with a useful preliminary investigative tool to guide their deliberations. Minor breaches of the consumer protection laws can also be dealt with via infringement notices, which may allow those in breach to pay an amount without the need to go to court.

One of the most effective ways of ensuring compliance with consumer protection laws is the public warning notices issued by various regulators, including some state fair trading bodies. The so-called ‘naming and shaming’ option is an effective tool to provide information to the public and alert them to traders that may cause detriment to consumers. The agencies will also be able to seek orders for redress on behalf of consumers not party to enforcement proceedings for breaches of the law, ensuring that all consumers affected by a breach have easier access to redress, including refunds. This power would extend only to redress that is quantifiable and would not allow for a court to make orders of a more general nature, such as damages. This mechanism for redress for non-parties will be particularly useful for those thousands of consumers who suffer small losses and who decline to take action individually because of the cost or inconvenience. Businesses should not profit from consumer loss just because the detriment is small or because the harm is spread widely.

These enhanced enforcement tools will provide the ACCC and ASIC with additional ways to take effective, proportionate action against a wide range of businesses and others who breach consumer laws. The new Australian Consumer Law represents a milestone in the regulation of business law. The bill before the House today brings substantially enhanced protections to consumers. It contains some of the most significant and far-reaching consumer laws brought before the Australian people in many years. But the bill is just the first step in what will be the most comprehensive overhaul of consumer laws in at least a generation.

It is a bill of which this government is very proud. In 2010, the government will introduce measures that will complete the Australian Consumer Law reform process. A second round of reform will then be introduced to parliament to bring in a new national regime of product safety regulations. The Commonwealth will then be able to implement temporary and, if deemed necessary, permanent bans on unsafe products that will apply nationally. This round will also amend the Trade Practices Act to change its name to the Competition and Consumer Act. By the end of 2010, the Australian Consumer Law reform process will be complete. This process will take Australia a long way towards the seamless national economy that was agreed by COAG to be one of this nation’s most fundamental national goals. It is a goal that this government is fully committed to and one that will bring multiple benefits to the Australian people, to Australian business and to the Australian economy. I commend the bill to the House.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

in reply—I would like to thank honourable members who have taken part in the debate on the Trade Practices Amendment (Australian Consumer Law) Bill 2009 and I would like to thank members for the spirit in which they have engaged in the debate. I think it has been a constructive debate on both sides on a very important policy initiative.

On 2 October 2008, the Council of Australian Governments reached a historic agreement to create a single national generic consumer protection law to be called the Australian Consumer Law. The bill is the first legislative step to give effect to COAG’s agreement. It will implement key elements of the Australian Consumer Law, including a new national unfair contract terms law and new penalties, enforcement powers and options for consumer redress for the ACCC and ASIC. Attempts to create a single consumer law have been made in the past and they have a sorry history. Most notably, in the early 1980s the federal, state and territory governments agreed to create harmonised consumer protection laws. This initiative succeeded in creating harmonised laws for a time, but consistency was all too soon lost as individual jurisdictions amended and augmented their laws over time.

COAG’s decision of 2008 differs from previous attempts at harmonisation in that it establishes an application legislation regime. This means that amendments to the Commonwealth’s consumer protection legislation will automatically apply in all states and territories. In addition, all jurisdictions have agreed to be bound by the intergovernmental agreement for the Australian Consumer Law which sets out the manner in which changes to the Consumer Law will be made in the future. COAG made this intergovernmental agreement at its meeting of 2 July 2009.

On 25 June 2009, the bill was referred to the Senate Standing Committee on Economics for inquiry and report. In the course of its inquiry, the committee received 58 public submissions and held public hearings in Canberra and Sydney, reflecting the strong interest in this legislation from businesses and consumers. The committee tabled its report on the provisions of the bill on 7 September 2009. The committee expressed strong support for the bill and recommended that the bill should be passed. I note that the coalition members of the committee have also recorded their broad support for the bill. In the report, the committee has also made recommendations in relation to the publication of guidelines by the ACCC and ASIC on the operation of the provisions of this bill and the coverage of the insurance contracts under the proposed national unfair contract terms law. The government will consider the committee’s findings and recommendations carefully prior to debate on the bill in the Senate.

I am pleased the opposition has expressed its broad support for the bill and I appreciate the input of opposition members in the debate and the constructive discussions we have had with the member for Cowper and also with Senator George Brandis with regard to some aspects of the legislation. The government will continue these discussions with the opposition and we will consider making amendments in the Senate. This bill represents an important milestone in achieving a lasting national consumer protection law. That said, the creation of a national unfair contract terms law and the strengthening of the enforcement regime for the consumer protection provisions of the Trade Practices Act are also worthy objectives in their own right.

The Australian Consumer Law reforms will be completed via a second bill to be introduced in early 2010. The second bill will include the national consumer product safety regulatory regime, as well as enhancements to the existing consumer protection regime, based on best practice among state and territory laws.

I thank my colleagues on the Ministerial Council on Consumer Affairs. I also want to take the opportunity to thank publicly in this chamber my colleague the previous competition policy minister, Chris Bowen, for all the work he has done on this, as well as the Business Regulation and Competition Working Group for their ongoing cooperation in achieving these major reforms.

I commend the bill to the House.

Question agreed to.

Bill read a second time.