Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill, and corrections to the explanatory memorandum. The memorandum was circulated in the chamber on 27 October 2009.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Before we get to the amendments I have some preliminary questions, as is the practice, to put to the minister.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Best of luck!

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

You are an expert on this, aren’t you?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I’m just reading the title of the bill, but ask me anything you like!

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank Senator Evans for his indication of full cooperation in terms of the questions I will be asking.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I’ll tell you everything I know.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I am very pleased to hear that, Senator Evans. These are preliminary matters. Firstly, is it correct that under the proposals only the ACCC will be able to seek a declaration that a term is unfair under section 87AC?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Yes, Senator.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

Senator Joyce interjecting—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Senator Joyce seems surprised. If you ask nicely, Senator Joyce, you can actually get direct answers. I thank the minister for his answer. That means that consumers will not be able to seek a declaration. Is this not completely against the longstanding underlying policy of the Trade Practices Act, that consumers have a private right of action?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I am advised, Senator Xenophon, that government amendment (38) seeks to address the concerns you raise, and will clarify those matters. So we might have that discussion when we get to that amendment and we will see whether or not you are satisfied with the proposed government amendment. I am advised that it may not be exactly what you are after but it seeks to deal with some of that issue.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank the minister for his answer. Perhaps we can have a broader discussion about that under government amendment (38). I appreciate that. I will just go to the next issue. As I understand it, currently an order for damages may be made under section 82 of the Trade Practices Act for contraventions of the Australian consumer law. Can the government clarify the status of item 44 in part 7 of the bill, as the government’s amendments to the bill are to remove this term. I am not sure whether I have misunderstood that but my understanding is that it actually takes away rights that consumers have with respect to this.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I am advised, Senator Xenophon, that consumers will be able to access compensatory orders for loss or damage suffered as a result of a business relying on an unfair contract term. Schedule 2 item 59 in the bill provides that section 87 of the Trade Practices Act applies to a business’s use of an unfair contract term. Schedule 3 item 42 provides the same for section 12 GM of the Australian Securities and Investments Commission Act 2001. Compensatory orders made under section 87 of the TPA allow compensation for actual loss or damage as well as for likely loss or damage. Damages under section 82 only apply to actual loss or damage.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank the minister for his answer. I have one more preliminary question before we deal with this. I understand that when Minister Bowen had carriage of this legislation in the middle part of last year, the unfair contract term provisions of the Australian Consumer Law applied to both consumers and small businesses. Is that correct?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I understand that the exposure draft legislation included business-to-business contracts, but the government took a policy decision to exclude those contracts based on the potential adverse impact they would have on small business. For businesses and their commercial dealings, a general notion of unfairness that is subject to interpretation by the courts may have the effect of increasing risks and costs faced by business, particularly by small business. It was felt that this would undermine the position of small business. The government believes that specific instances of unfairness in business-to-business contracts is best dealt with by the unconscionable conduct provisions of the Trade Practices Act, which we have agreed to strengthen. So I think your confusion is that in the exposure draft they were included and in the final legislation they were not.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I want to make it clear that I was not confused. It is my understanding that, initially, there was talk of going down the path of business-to-business contracts, including small businesses, but there was a policy decision to exclude that. Can the minister advise whether that policy change from the exposure draft to what is now before us was made as a result of representations by small business groups? It is my understanding that small business groups were keen to have protection for some of these contracts—or was it made by representations from larger business groups?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Xenophon, I did not mean to insult you by presuming you were confused. I am the last one to throw stones in that respect, as I come to this bill! I understand Mr Emerson was conducting consultations in relation to the government response into the Senate inquiry into unconscionable conduct. I think it is a view that was best picked up in that context rather than in the context of this bill, so I think it is part of that process of Mr Emerson’s consultations that that policy decision was taken by government.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Without labouring the point, those consultations presumably would have included representations from peak bodies representing big businesses in this country.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

As I understand it, Mr Emerson’s consultations were very broad and I am sure they included lots of small businesses as part of that process. I think it is fair to say that Mr Emerson is very much engaged with the sector, but if you are really asking me who influenced the policy decision—and, I suspect, trying to make some case in that regard—I think it was fair to say it was a policy decision by government. There were those consultations conducted by Mr Emerson and it was determined by government to deal with it in that other way. I would argue that Mr Emerson and the government consulted widely, but I think you are almost asking me to tell you which was the submission that had the most impact on the government’s thinking. I have described the process and the decision for you.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

It is not a fishing expedition. It is a genuine thirst for knowledge, because there is a real concern that an opportunity has been lost in giving protection to small businesses. I cannot take it any further than this but am grateful for the minister’s answers today.

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

That being the case, we could move to the first amendment, which is in the name of Senator Xenophon.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (1) and (6) in my name together.

(1)    Schedule 1, item 1, page 7 (after line 21), after section 4, insert:

4A  Unfair term—payments in person, in cash

        (1)    Without limiting section 3, a term that enables, or has the effect of enabling, a party to charge a fee for receiving a payment in person or in cash is taken to be an unfair term of a consumer contract.

        (2)    In this section:

fee means an amount additional to the upfront price payable under a consumer contract;

(2)    Schedule 1, item 1, page 7 (after line 21), after section 4, insert:

4B  Unfair term—personal information

        (1)    Without limiting section 3, a term that enables, or has the effect of enabling, one party to transfer personal information about another party to a person outside Australia without that other party’s written, informed consent is taken to be an unfair term of a consumer contract.

        (2)    In this section:

personal information has the meaning given by section 6 of the Privacy Act 1988.

transfer, in relation to personal information, means communicate, send, trade or republish that information by any means to any person.

(3)    Schedule 2, item 18, page 31 (line 9), omit “(other than an award of damages)”.

(4)    Schedule 3, item 26, page 69 (line 4), omit “(other than an award of damages)”.

This relates to the definition of consumer contracts and the inclusion of low value business-to-business contracts. These amendments are designed to include business-to-business contracts involving transactions less than $2 million, to also be subject to the unfair contract term provisions of the legislation. This provision was included in the first drafting of the legislation but was removed before the bill was introduced, as the minister pointed out in the exposure draft. Like consumers, small businesses are increasingly victims of unfair contract terms and should have access to these unfair contract terms and options for redress. This amendment will enable small businesses to be covered by the unfair contract terms provision of the legislation.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I indicate on behalf of the government that we will not be supporting these two amendments from Senator Xenophon. As I indicated earlier, the government consulted on the exposure draft of the unfair contract terms provisions during May 2009. The original draft provisions were expressed to apply to business-to-business contracts. The inclusion of business-to-business contracts gave rise to considerable business concern about the ambit of the proposed provisions and the potential effects on business activity in Australia. The government considered the approach suggested by Senator Xenophon—that is, to apply a monetary limit to the contracts that the provisions would apply to. After further consideration, the government responded to these concerns by removing the application of the unfair contract terms provisions from all business-to-business transactions.

Upon the introduction of this bill into the parliament, the Minister for Competition Policy and Consumer Affairs announced that provisions relating to the relationship between businesses would best be dealt in the context of the government’s responses to the Senate Economics References Committee’s review of the statutory definition of ‘unconscionable conduct’ and the review by the Parliamentary Joint Committee on Corporations and Financial Services of the franchising code of conduct. On 5 November 2009, the Minister for Competition Policy and Consumer Affairs announced the government’s responses to these reviews. Those responses include legislative amendments to the unconscionable conduct provisions of the TPA. In the context of business-to-business contracts, a general notion of unfairness that is subject to interpretation by the courts may have the effect of increasing risk and costs faced by business and by small business in particular. In the government’s view, this would undermine the position of small businesses. So, as I said, the government will not be supporting Senator Xenophon’s amendments.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

The coalition are very sympathetic to the arguments that have been put forward in regards to business-to-business contracts. We have been also assured by the minister that these issues will be ventilated further in the franchising code of conduct and the unconscionable conduct provisions of the TPA. So at this point in time we give the government the benefit of the doubt. We will wait for that review to come to a conclusion. However, we state on the record that, should there be no further movement in that area, we would be very supportive of changes. But at this point in time, we do not support this amendment—not because we do not agree with the sentiment of it, but because the process of dealing with this issue is, we are assured, in train. We will wait for the conclusion of that process.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I am grateful to both Senator Joyce and Senator Evans for their responses. I note that they are not supporting these amendments. I indicate that I will not be seeking to divide on these amendments. Regarding the process that Senator Joyce, on behalf of the coalition, has been assured about, what time frame is there to look at the issue of business-to-business contracts for small businesses to give them that added layer of protection, Senator Evans? Further, can the minister advise what level of protection there is for small businesses in other jurisdictions, such as Europe? I understand that this concept of giving small businesses a similar level of protection to that which is provided to consumers is not unique.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I understand, Senator Xenophon, that there will be amendments in relation to the unconscionable conduct provisions within the next few months, so it is intended that we proceed with those—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Before or after the election?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

One thing that I am certain of, Senator Xenophon, is that you and I will both be held in suspense about such things for a while. But it is the intention of the government to proceed with those amendments. As to providing some research for you on European provisions, I will undertake to apply my mind to that over the break before we come back for the budget. If I can help you in that regard, I will.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I might have to Google that, Minister.

Question negatived.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

The opposition opposes schedule 1 in the following terms:

(1)    Schedule 1, item 1, page 6 (lines 15 to 18), subsection 3(4) to be opposed.

(2)    Schedule 1, item 1, page 8 (lines 21 to 23), subsection 7(1) to be opposed.

These amendments provide for the removal of the reversal of the onus of proof. We feel that currently there is the capacity for the exploitation of the current provisions regarding the onus of proof. As discussed in my speech on the second reading, those who wish to remove themselves from a contract that might not necessarily be onerous—they have just decided to move on—can foist their position back on to the business that provided the services under that standard contract. These amendments deal with that. It amends two sections of the bill: schedule 1, item 1, page 6, lines 5 to 18 and schedule 1, item 1, page 8, lines 21 to 23.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Senator Joyce, what will the effect of this be? My understanding is that the reversal of the onus of proof in the bill would put the onus on the business party to establish that the term is reasonably necessary to protect the business’ legitimate interest. As I see it, these amendments would make it more difficult for consumers in the context of the framework of this bill. I may be mistaken. I would be grateful if Senator Joyce could outline what it will do in practical terms in a dispute between a consumer and a small business in terms of the evidentiary burden. We here all know that one of the great problems we have in this country in terms of access to justice is that when you have a legal dispute between a party with shallow pockets and a party with very deep pockets, the party with a lack of resources generally misses out, because they cannot afford to have their case, however legitimate or meritorious it may be, heard to a conclusion in the courts because of the costs involved.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

It is the juxtaposition of the convenience of the consumer and the convenience of the business that offered the standard form contract. The coalition believes that if the onus of proof lies with the business then there is a capacity for that to be used as an out clause. That is, people under such things as phone contracts and rental car contracts can use onus of proof as a mechanism to avoid their obligations under the contract rather than avoid them on unfair terms—that they have just decided that they want to get out of it. We believe this threatens the capacity of business to operate in a fluid form. They will always be looking over their shoulder on this contractual term, wondering whether the consumer, once they get sick of a contract, can just back their way out by saying, ‘You have to prove that I have not been slighted.’ At the moment, with standard form contracts, the general presumption is that if the terms are fair you stick to them.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

The government shares the concerns raised by Senator Xenophon and will be opposing Senator Joyce’s amendments. We think that removing these two important provisions would really undermine the bill. We think these unfair contract and provisions work to the benefit of consumers. The rebuttal presumptions at subsection 3(4) and subsection 7(1) of the bill are essential for the practical operation of the unfair contract provisions. The rebuttal presumptions reverse the onus of proof in two specific circumstances: (1) when requiring the business to show that the contract in dispute is not a standard form contract and (2) when requiring the business to show that the term in question is required by a legitimate business interest. It would be highly unlikely that the consumer would be able to prove that a contract is standard form if they have access only to their own contract. Similarly, it would be impossible for an individual consumer to prove that something is not in a business’s legitimate interests. The removal of these rebuttal presumptions would totally undermine the ability of consumers to use the unfair contract terms law at all. We think it fundamentally undermines the ability of consumers to advance their case. On that basis, we will not be supporting the amendments.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

Obviously the government fundamentally believes it would not and we fundamentally believe that it would. We do not have the numbers. We will not be dividing on it.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

There are many, many things that I agree with Senator Joyce on—and on some things we do not agree—but this is not one of them. My concern is that removing this reversal would require the consumer or the ACCC to prove that the term is not reasonably necessary to protect the reasonable legitimate interests of the business. This adds considerably to the evidence burden on the consumer or the ACCC and makes it much harder to show that the term is unfair. I believe it also adds unnecessarily to the costs to consumers and the ACCC in bringing actions for unfair contract terms. So I agree entirely with Senator Evans: I think it is desirable that we keep this amendment in there, because the practical consequences for consumers in enforcement will be very detrimental to their rights being enforced.

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

The question is that subsection 3(4) and subsection 7(1) in item 1 of schedule 1 stand as printed.

Question agreed to.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I move amendment (1) on sheet 5891:

(1)   Schedule 1, item 1, page 7 (after line 21), after section 4, insert:

4A  Unfair term—payments in person, in cash

        (1)    Without limiting section 3, a term that enables, or has the effect of enabling, a party to charge a fee for receiving a payment in person or in cash is taken to be an unfair term of a consumer contract.

        (2)    In this section:

fee means an amount additional to the upfront price payable under a consumer contract;

Under this amendment it will be considered an unfair contract term if businesses charge customers additional fees for paying bills in person or with cash—with legal tender. In July 2009, Telstra announced that it would be introducing a range of fees that would ‘reduce face-to-face customer service and drive more customers towards online bill payments’. This is something that Telstra eventually reversed. I congratulate Telstra for reversing it, but it did so because it made a judgment call, as a corporation, that that was not the right thing to do for consumers. However, there are other corporations that continue to charge this fee. I believe that it is particularly unfair to our senior citizens and to those citizens who do not have online access, who do not have credit cards and who want the comfort of being able to pay with cash for their transactions. Telstra has done the right thing by abolishing this revenue-generating fee, and I encourage other companies that currently have this fee—other phone companies, I understand—to follow its lead. This amendment will make it an unfair contract term to charge customers who cannot or choose not to use the internet to pay their bills with any company in the future. I think it is a straightforward amendment. I think a legal tender is legal tender; you should not be charged for the privilege of paying in cash.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I have two observations of a personal nature to make on this amendment of Senator Xenophon’s. I remember the fight about demanding that people pay wages in cash and losing that argument as time moved on. At the time, we lost a lot of security guards, who used to escort the payrolls. There were other issues for people, but I will not go into those issues.

The other thing—and I have to declare my interest—is that I have been encouraging my department to give discounts for people who apply for visas online, a discount for immigration department charges as a means of encouraging people to apply over the internet for visas and reduce some of the traffic in some of our offices. But I digress.

The bill as drafted would allow for such terms to be challenged as being unfair. The government does not support Senator Xenophon’s proposal on the basis that it does not take into account the full implications of the suggested prohibited term and imposes potentially significant cost implications for businesses, which we think need to be understood. Indeed, in some circumstances such a clause would not be considered unfair on the basis that it would be impractical or uneconomic to ban the practice of differential pricing in certain circumstances.

The government has amended the bill to remove the regulatory power to prohibit terms. However, this will not preclude the prohibition of particular terms on the face of the legislation at a later time subject to two key issues being addressed: firstly, the existence of a robust regulatory impact assessment of the proposed prohibition which explores the full implications of such a step; and, secondly, the agreement of the states and territories as required by the Intergovernmental Agreement for the Australian Consumer Law. The prohibition of terms is not to be undertaken lightly and the full implications of such a step must be undertaken with appropriate care and consideration for any wider implications. So on that basis, because of those concerns, the government will not be supporting Senator Xenophon’s amendment.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

It is great to see the minister hitting his straps. We have got an area which he is completely across, which is the use of cash, so we both welcome this amendment. However the coalition, although very sympathetic to the views put forward by Senator Xenophon, will not be supporting this, especially in the regulation of cash from point-to-point transfers or point-to-point sales. At this juncture we doubt the capacity for this regulation. We also have concerns about the relevance to this legislation and, as such, we will not be supporting it.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I am disappointed that both the government and the opposition do not see fit to support this. I would have thought that in relation to Senator Joyce’s comments, this is directly relevant to the legislation, in that it is unfair to be charged an additional amount for cash in terms of whatever the standard fee for the goods or services is—if you pay in cash you get charged an additional amount.

I note Senator Evans’s comments that in his department he has encouraged the practice of giving a discount if you pay online. That to me is quite different from what is at stake here. If you give a discount for whatever the standard fee is to encourage people to pay online, that is still legally quite distinct from charging an additional amount for paying in cash. If it is a genuine discount—in other words, it is not an artifice, an artificial way of trying to add an additional fee by paying in cash because it may save some administrative costs—if the price for a good or service is a particular amount, why should you as a consumer be charged an additional amount to pay in cash? That is, I think, as simple as the argument is.

I have worked with Senator Joyce on a number of issues for the benefit of consumers and I would have thought that especially in regional Australia there is a real issue about to people wanting to be able to go to their local post office, their local newsagent or wherever bills can be paid, and have that human contact, pay in cash, and not be charged an additional amount because, for whatever reason, they choose to pay in cash or they are unable to pay online because they do not have access to that facility. Particularly in some remote parts of this country where there is a real issue in terms of online access or reliability, I thought that would have been reasonable.

I indicate that I seek to divide on this amendment and my subsequent amendment, if that assists the committee and you, Mr Temporary Chair. The minister said that it might be unfair or impractical to have differential pricing. I appreciate his response, but can the minister give us some examples of where it is unfair or impractical? I think that it is a sad day when cash carries with it a penalty in terms of paying some basic household bills.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

As I think I made clear, I am not expert on this legislation. I am filling in for Senator Sherry, who is away on sick leave. I think that the nub of it is that you are effectively providing a blanket provision, and the government’s view is that that should not occur, that there ought to be some testing of the merits and, if there are problems, the consumer ought to be able to challenge that. I think we accept that principle, and that is why I talked about a robust regulatory impact assessment of the proposed prohibition, which explores the full implications of such a step with the agreement of states and territories. I think our objection is to the blanket nature of your approach and I think we are fundamentally in disagreement about that. If I understand it, that is the nub of the disagreement.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

Just very briefly, we see that the issue pertaining to the payment of cash is external to the contract terms for which the provision of the service or the good was provided, and using the example of payment at the post office is a good one. Your contract with the telephone company is not necessarily your contract with the person who collects the cash at the post office. So if the person in the post office wants to charge you a fee, then that is external to the contract that you hold and that is why I do not feel that in this instance it is applicable to this piece of legislation.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I will deal firstly with Senator Joyce’s comments. It is not external. If you are charged a fee for paying cash, my clear understanding is that it has to be part of your contract term with the phone company, or whatever, to entitle that to occur. I would have thought that, because it is not external, the fee charged would be between the post office and the company, for instance. So it is not external.

I would like to take the issue to Senator Evans, to clarify the government’s position. I think the government’s position is that there has not been a robust regulatory impact assessment in relation to this. We are talking about being charged a fee for paying in cash. I do not want to misrepresent the government’s position, but, as I understand it, there is a concern about the blanket nature of this amendment. Does this mean that the government will be looking at the reasonableness or otherwise of charging a fee for cash in relation to the next round of amendments to consumer legislation? Will there be a robust regulatory impact assessment and also a general principle as to the circumstances in which it is reasonable to charge an additional amount for paying cash? I cannot think of any. That is my view, but will the government be looking at both the circumstances in which a fee is charged and the extent of that fee? They are two distinct issues, but they are tied into the same principle.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Xenophon, I understand that the ACCC are going to be developing guidance to deal with concerns raised by those who might be impacted, under this legislation, by the sort of situation that you raise. It is something that the government has been aware of. The guidance from the ACCC will be about how consumers can challenge concerns in that regard. So it is something that has been thought about. The ACCC are giving attention to it now, in anticipation of the legislation. I think the answer is that we intend to deal with it that way rather than through the blanket provision that you propose via the amendment.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Before we vote on this, can the minister give an indication as to the time frame for such an assessment? Will it be in the context of the amendments to consumer law that are coming up later this year or will it be at some other time?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Xenophon, with regard to the timing, I am going to take that one on notice. If I can get back with more details before the end of the debate, I will. If not, I will get the minister to drop you a note. I do not have that information available. As I said, it has been anticipated and the ACCC have started looking at the issues, but I will have to take the question about the time frame on notice. I will make sure that the minister drops you a note if I do not have an answer to your question before the end of the debate.

Question put:

That the amendment (Senator Xenophon’s) be agreed to.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I move amendment (2) on sheet 5891:

(2)    Schedule 1, item 1, page 7 (after line 21), after section 4, insert:

4B  Unfair term—personal information

        (1)    Without limiting section 3, a term that enables, or has the effect of enabling, one party to transfer personal information about another party to a person outside Australia without that other party’s written, informed consent is taken to be an unfair term of a consumer contract.

        (2)    In this section:

personal information has the meaning given by section 6 of the Privacy Act 1988.

transfer, in relation to personal information, means communicate, send, trade or republish that information by any means to any person.

(3)    Schedule 2, item 18, page 31 (line 9), omit “(other than an award of damages)”.

(4)    Schedule 3, item 26, page 69 (line 4), omit “(other than an award of damages)”.

This amendment is quite simple. It will require banking institutions to obtain written, informed consent from customers before their personal information can be transferred to a person outside Australia. Currently, data, including credit card numbers, passport details, PINs, licence numbers, marital status, home address and employment details can be, and are, sent to offshore locations without a customer’s consent. This is a breach of privacy; it should be prohibited. I see this, as do many others, as a pretty fundamental contract term. It is inherently unfair for that information to be sent overseas in the absence of written consent.

Last October I jointly, along with the Finance Sector Union Australia, commissioned a survey which showed that 91 per cent of Australians say they would choose a bank that would not send their personal information overseas for processing. It was a nationwide survey. This survey also revealed that 83 per cent of people believe banks should be required to get written permission from a customer before sending their personal details overseas. The FSU is clearly right about this. More than 5,500 finance jobs have already been lost to cheaper overseas labour and with them have gone all these personal details. I think it is important for Australians to have the right to control who has access to their personal information. Banks should not be allowed to try and save a few bucks by jeopardising the privacy of millions of Australians. I applaud the FSU and the work that it has done in relation to this. This goes to an issue of the unfairness of not giving consumers the right to consent, or otherwise, to their information going overseas. I acknowledge that Senator Fielding has put up legislation in similar terms, and I applaud him for that. This is another way of trying to achieve the same thing. It is about consumers having that right. Not giving it to them is inherently unfair.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I think Senator Xenophon understands that the government will be opposing this amendment. Although we all consider the issue to be an important one, it is a question of how you respond to this particular concern. I know it is a matter of community concern and it is an important issue. Consumer credit protection and the privacy of personal and financial information exercise the minds of us all. That is why the government has moved to strengthen the consumer protections surrounding consumer credit contracts. Protections for consumers’ privacy are provided through APRA’s prudential standards and by privacy laws which regulate the way in which information may be handled when transferred overseas.

The Senate would be aware that Senator Ludwig recently announced a range of reforms to the Privacy Act in response to the Australian Law Reform Commission’s privacy report, including stronger protections for cross-border data flows. Under the proposed reforms, agencies and businesses will remain accountable for personal information which is transferred overseas where certain protections cannot be guaranteed. So the government’s view is that the concerns are best addressed in these ways and we do not think it is appropriate to support Senator Xenophon’s amendment.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

In regards to Senator Xenophon’s further amendment, although we have sympathy once more about the issue of material going overseas, we believe that it would be more appropriate to place this information under the Privacy Act. There are a range of conditions under the Privacy Act that deal with this issue. Therefore, we will not be supporting this amendment. We would be more inclined to follow the provisions that are already laid down in the Privacy Act.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Senator Joyce has given me a lot of sympathy this evening! I do not want his sympathy; I want his vote! And it looks as though I am not getting it. This is an important issue, and I know that my colleagues the Greens are supportive of this—and I appreciate their support, along with that of Senator Fielding, as I understand it. The government and the opposition have stated their position. Can I just ask Senator Evans: does the government have concerns about the lack of any requirement for consent for information to go overseas? Is it something that the government is looking at? Is there some light at the end of the tunnel in terms of the process of information going overseas?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Xenophon, I think I acknowledged the legitimacy of your concerns and the community’s concerns, and I share those. But—and this is the point that Senator Joyce made in his response—the government sees these issues as being best dealt with under the Privacy Act. As I said, Senator Ludwig recently announced a range of reforms in response to the Australian Law Reform Commission’s privacy report, including stronger protections for cross-border data flows, and that is the way the government intends to deal with the legitimate concerns you raise.

Question put:

That the amendment (Senator Xenophon’s) be agreed to.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

by leave—I move government amendments (2) and (3), (4) to (7), (14), (20), (28) and (29), (31), (33) and (34), (37), (40), (43), (50), (56), (59), (61), (64) and (65), (2) and (3) on sheet BJ236:

(2)    Clause 2, page 2 (table item 4, 1st column), omit “39”, substitute “32”.

(3)    Clause 2, page 2 (table item 7, 1st column), omit “75”, substitute “74”.

(4)    Schedule 1, heading to Part 1, page 4 (line 2), omit “and prohibited”.

(5)    Schedule 1, item 1, page 4 (line 22), omit the definition of prohibited term in section 1.

(6)    Schedule 1, item 1, page 5 (line 9), omit the heading to Part 2, substitute:

        PART 2—UNFAIR CONTRACT TERMS

(7)    Schedule 1, item 1, page 5 (line 10), omit the heading to Division 1.

(14)  Schedule 1, item 1, page 8 (line 19), omit the heading to Division 3.

(20)  Schedule 1, item 5, page 12 (lines 3 and 4), omit “or 6(1)”.

(28)  Schedule 2, item 40, page 46 (line 2), omit “38”, substitute “32”.

(29)  Schedule 2, item 43, page 46 (line 20), omit “or a prohibited term”.

(31)  Schedule 2, item 47, page 46 (line 30), omit “or 6(1)”.

(33)  Schedule 2, item 59, page 48 (line 9), omit “or a prohibited term”.

(34)  Schedule 2, item 60, page 48 (lines 15 and 16), omit “of Part VC or of the Australian Consumer Law”, substitute “or of Part VC”.

(37)  Schedule 2, item 73, page 50(line 6), omit “or a prohibited term”.

(40)  Schedule 3, heading to Part 1, page 51 (line 3), omit “and prohibited”.

(43)  Schedule 3, item 7, page 52 (line 6), omit “and prohibited”.

(50)  Schedule 3, item 7, page 56 (line 25), omit “or 12BJ(1)”.

(56)  Schedule 3, heading to Part 8, page 79 (line 2), omit “and prohibited”.

(59)  Schedule 3, item 37, page 79 (line 28), omit “or a prohibited term”.

(61)  Schedule 3, item 42, page 80 (line 19), omit “or a prohibited term”.

(64)  Schedule 3, item 44, page 80 (line 29), omit “or a prohibited term”.

(65)  Schedule 3, item 45, page 81 (line 3), omit “BA,”.

We also oppose schedules 1, 2 and 3 in the following terms:

(13)  Schedule 1, item 1, page 8 (lines 1 to 18), Division 2 to be opposed.

(25)  Schedule 2, item 28, page 44 (lines 8 to 11), to be opposed.

(26)  Schedule 2, item 30, page 44 (lines 23 to 26), to be opposed.

(27)  Schedule 2, items 33 to 39, page 45 (lines 5 to 22), to be opposed.

(30)  Schedule 2, items 44 and 45, page 46 (lines 21 to 25), to be opposed.

(32)  Schedule 2, items 51 to 55, page 47 (lines 9 to 22), to be opposed.

(35)  Schedule 2, item 71, page 49 (lines 25 and 26), to be opposed.

(39)  Schedule 2, item 75, page 50(lines 15 to 17), to be opposed.

(42)  Schedule 3, item 2, page 51 (lines 8 to 10), to be opposed.

(49)  Schedule 3, item 7, page 55 (lines 6 to 25), section 12BJ to be opposed.

(57)  Schedule 3, item 33, page 79(lines 4 to 6), to be opposed.

(58)  Schedule 3, items 35 and 36, page 79 (lines 18 to 21), to be opposed.

(60)  Schedule 3, items 38 to 41, page 80 (lines 1 to 12), to be opposed.

(62)  Schedule 3, item 43, page 80(lines 20 to 22), to be opposed.

(67)  Schedule 3, item 56, page 82 (lines 23 to 25), to be opposed.

The group of amendments is to do with prohibited terms. The bill currently provides a regulation-making power whereby the minister may prescribe certain contract terms as unfair in all circumstances. It would then be a contravention for a business to rely on or purport to rely on a prohibited term in any standard form consumer contract. These amendments would remove the regulation-making power from the bill. A number of consequential amendments to the enforcement provisions of the bill will also need to be made to remove references to the prohibited terms. A similar regulation-making power has existed in section 32Y of the Victorian Fair Trading Act 1999 since 2003. However, it has never been used. No terms were proposed to be prohibited upon enactment of the bill. The removal of the regulation-making power to prescribe terms will not have any impact on an individual’s or regulators’ ability to seek a court declaration that a term is unfair. These amendments and all the consequential amendments relate to prohibited terms or the black list, so it is the one issue picked up in all the amendments.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

Without going through them ad nauseam, or we will be here till tomorrow night, the coalition are supporting the government on these amendments on prohibited terms. We would also like to express thanks for the support given in the negotiation on a lot of these amendments that was provided in detail in my speech on the second reading debate. Without any further ado, we will be supporting the government on these amendments.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

The question is that the government amendments (2) and (3), (4) to (7), (14), (20), (28) and (29), (31), (33) and (34), (37), (40), (43), (50), (56), (59), (61), (64) and (65) on sheet BJ236 be agreed to.

Question agreed to.

The Temporary Chairman:

The question now is that division 2 of part 1 in item 1 of schedule 1 as amended, items 28, 30, 35 to 39, 44 and 45, 51 to 55, 71 and 75 of schedule 2 and items 2, 7, 33, 35 and 36, 38 to 41, 45 to 56 of schedule 3 stand as printed.

Question negatived.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (2) and (7) on sheet 5898:

(2)    Schedule 1, item 1, page 6 (lines 1 to 14), omit subsections 3(2) and (3), substitute:

        (2)    In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the contract as a whole.

(7)    Schedule 3, item 7, page 52 (line 29) to page 53 (line 11), omit subsections 12BG(2) and (3), substitute:

        (2)    In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the contract as a whole.

These amendments delete references to the terms ‘transparency’ and ‘detriment’ from the bill. Courts currently have the discretion to consider all aspects of cases before them and should not be constrained to focus on transparency and detriment specifically when it comes to determining whether or not a contract term is unfair. The term ‘unfair’ is expressly and separately defined, and the subsequent specific references in the bill to transparency and detriment are therefore unnecessary.

These are very important amendments in the context of the effectiveness of this legislation. These are additional hurdles for consumers to seek redress, and I am very concerned about this. Rather, the mandatory requirement for the court to focus on transparency and detriment will require the court to address these specific questions and will effectively turn these mandatory requirements into tests in themselves and in a manner that will negatively impact on the consumer. Therefore, this set of amendments will remove this additional and unnecessary test and will give greater opportunity for redress for consumers against unfair contract terms.

I am grateful for the advice I have received from Associate Professor Zumbo on this. I will briefly refer to the Senate Economics Legislation Committee inquiry. National Legal Aid argued that the concept of transparency implies that consumers are able to make informed choices about contract terms. However, they stated in their submission that their casework suggests the opposite. National Legal Aid said:

… because:

• most consumers do not read contracts—most rely on a notion that traders will act in a fair and reasonable way when it comes to enforcing their rights;
• even when they read contracts, consumers do not often understand how a particular clause will operate in practice; and
• even where a contract is read and understood, standard clause contracts are non-negotiable—it is a falsity to think that consumers can somehow bargain their way through amending or deleting a clause in a contract that is unfair but transparent.

Associate Professor Zumbo also argued in his submission that:

… a term can be “transparent” but still be unfair on the simple, but objective basis that the larger party’s bargaining power allows the larger party to draft and impose a contract term in such a way as to (i) represent a significant imbalance in the contractual rights and obligations in larger party’s favour; and (ii) in a manner that that goes beyond what is reasonably necessary in order to protect the legitimate interests of the larger party.

I believe this legislation has been weakened significantly for the benefit of consumers by having the terms ‘transparency’ and ‘detriment’ in it.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Xenophon, I think it is best summed up like this: we agree with you on one out of two. As I understand it, the government amendments will pick up removing ‘detriment’ from the bill. It will remove ‘detriment’ as something the court deals with. That is picked up by our amendments (8) to (10) and (44) to (46), which I think come up next. The unfairness test in the bill will be amended, hopefully, by those government amendments. That requires the court to consider the balance of the parties’ relative positions, the legitimate interests of the party advantaged by the term—usually the business—and whether application of, or reliance on, the term would cause detriment to the party disadvantaged by the term if it were to be applied or relied upon.

In determining whether a term is unfair under this test, the court may have regard to any relevant matter. However, the bill makes it clear that, in undertaking this assessment, the court must have regard to the transparency of a term and the contract as a whole. The concept of detriment, financial or otherwise, is relevant to the determination of whether a remedy could be applied under the unfair contract terms law. However, while the extent to which a term is disclosed clearly to a consumer is an important consideration to which the court should be directed, the existence of transparency in relation to a particular term is not a determinant of its unfairness.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank the minister for his response. I am grateful. It is good that one part of it will be dealt with. This whole legislation is about unfair contract terms, but you can have something that is transparently unfair—it is transparent but it is unfair. Just because it is out there and unfair does not take into account the disparity in bargaining power between the two. It is in the fine print, as National Legal Aid pointed out in their arguments about the concept of transparency and about consumers being able to make informed choices about contract terms because of what happens in the real world and the way these terms are drafted. My question to the minister is: was ‘transparency’ included in the exposure draft of this bill or has the concept of transparency been added since the exposure draft?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I am advised that the concept of transparency was in the exposure draft. I think the key point of difference for us is that, while we think transparency is an important issue, it does not prevent the court from making a decision about the fairness. We do not see that the court cannot still deal with the fairness. We think it is important that transparency of a term is something that the court ought to have regard to. Your point that somehow this provision undermines any assessment of fairness is not one we share.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I have received advice that, by adding the concept of transparency, it is another hurdle and another factor that may be taken into account when the core issue is whether the contract term is fair or unfair. I will not take it any further. We will agree to disagree in terms of my position, the government’s position and, indeed, the opposition’s position on this. If I were a betting man, which I am not, I would say that there will be litigation where large corporations will use transparency to argue that consumers should not seek redress when in fact we should be focusing on whether the contract term is fair or unfair.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

The coalition is sympathetic to the views once more—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I want your vote, not your sympathy.

Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

A lot of sympathy today. We are very sympathetic to the views of many in the industry who argued that the bill’s reference to a substantial likelihood of detriment creates an unacceptable degree of risk and uncertainty for businesses and consumers. As the bill is currently drafted, there is no requirement that the term actually create detriment for it to be unfair. It will be unclear to those entering into a contract which terms will be judged to be likely to cause detriment. In addition, a party may be placed in detriment when the contractual terms remain fair to both parties when each is on equal footing. By substituting the words ‘significant disadvantage’, the bill will only find a term unfair where a party is genuinely placed at a disadvantage. The court will then need to weigh up the relative positions of each party, whether they are unequal and whether one party is at a significant disadvantage.

Likewise the provisions of transparency are superfluous. The explanatory memorandum states that:

Transparency in the terms of a consumer contract may be a strong indication of the existence of a significant imbalance in the rights and obligations of the parties under the contract ...

the extent to which a term is not transparent is not, of itself, determinative of the unfairness of a term in a consumer contract and the nature and effect of the term will continue to be relevant.

Given that the government wishes to encourage transparency in contracts and that the existence of this term will provide parties with an incentive to provide transparency, there is no strong reason to insist on its removal. On these issues we will not be supporting this amendment.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Finally, in answer to Senator Joyce can I say that, with the amount of sympathy he is expressing for me tonight, he should be working for Hallmark! Will the government review this if there are court cases where transparency is seen to be a hurdle for consumers to seek redress? Is that something that will be monitored by the government in terms of the practical enforcement or the application of these laws?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Clearly, if the government thought a problem had emerged in terms of court interpretation, we would have a look at that and whether or not a response is required. That is very much a hypothetical but we are always alert to court decisions on important matters and whether or not they have implications for legislative intent. Obviously in this case the normal approach would apply. I am still recovering from the fact that Senator Xenophon is a Greek who does not bet. I am a bit shocked. He is the first Greek I have met who does not have a bet! It is a point well made. As I said, I think it is a hypothetical but obviously the government would monitor any court decisions which impact on the legislation.

Question negatived.

by leave—I move government amendments (8) to (10) and (44) to (46):

(8)    Schedule 1, item 1, page 5 (line 29), omit “term.”, substitute “term; and”.

(9)    Schedule 1, item 1, page 5 (after line 29), at the end of subsection 3(1), add:

             (c)    it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(10)  Schedule 1, item 1, page 6 (lines 4 to 7), omit paragraph 3(2)(a).

(44)  Schedule 3, item 7, page 52 (line 28), omit “term.”, substitute “term; and”.

(45)  Schedule 3, item 7, page 52 (after line 28), at the end of subsection 12BG(1), add:

             (c)    it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(46)  Schedule 3, item 7, page 53 (lines 1 to 4), omit paragraph 12BG(2)(a).

At present, the bill requires that, when considering whether a term is unfair a court must take into account the extent to which a term would cause or there is a substantial likelihood that it would cause detriment, whether financial or otherwise, to a party it relied on. Although this is a factor the court must take into account, detriment is not part of the test for unfairness.

The current test for unfairness in the bill has two limbs, both of which must be satisfied. A term will be found to be unfair where there is a significant imbalance in the parties’ rights and obligations arising under the contract and the term is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term. The bill would be amended to remove consideration of detriment from the factors the court must take into account and instead include detriment, whether financial or non-financial, as part of the test for an unfair term. This would make detriment a necessary condition for a term to be found unfair.

Specifically the amendments would add a third limb to the test to require that, in order to be unfair, a term would cause detriment, whether financial or otherwise, to a party that would be applied or relied upon. Consequently, the reference to substantial likelihood of detriment is a factor the court must take into account. In considering whether a term is unfair, it would be removed as it would be redundant. This amendment would more closely align the operation of the bill to the definition of ‘unfairness’ in the current Victorian Fair Trading Act on which the unfair contract and provisions are based.

The concept of detriment, financial or otherwise, is relevant to the determination of whether a remedy could be applied under the unfair contract terms law. Contrary to concerns expressed that a term could only be found to be unfair if actual consumer detriment is established, the amended unfairness test requires the court to consider whether application or reliance on the term were to cause detriment to the party disadvantaged by the term if the term were to be relied upon.

Progress reported.