Wednesday, 23 June 2010
Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010
The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010, which the previous speaker, the member for Werriwa, and the very capable shadow minister on our side, Mr Hartsuyker, outlined, comes to this chamber with the support of both sides of the parliament. That is not to say, though, that there are not still some reservations and some issues. The bill itself is several hundred pages long and introduces a range of provisions that have been canvassed for some time in the evolution of consumer and competition laws. It seems to be a step in the right direction. It is on that basis that I am pleased to lend my support to it, but I will add a few remarks about some of the provisions.
As my colleagues and the previous speaker, the member for Werriwa, have touched on, there are a number of amendments that the government has agreed to. Those amendments emerged from the analysis by coalition senators in the Senate inquiry process. A number of recommendations were made in terms of a definition of consumers that embraces small business. I obviously welcome that greatly and recognise that, when it comes to market power and the capacity to deal with contracts that are onerous, do not fulfil the spirit of competition, are not fit for purpose and involve unconscionable conduct, it is often hard to distinguish between a small business and a consumer. I find it remarkable though that the clarity that has been brought to this bill has not been carried over to the unfair contracts provision. For the life of me I cannot understand why the government’s commitment to include small business in the unfair contracts provisions of the laws has not been provided for. It is an enormous disappointment to the small business community that, although there is some protection here in the consumer space, in other areas to do with fairness of contracting the coverage and protection afforded to consumers does not extend to small business. We think that is a disappointment. The senators raised that point and sought to have it addressed. The government has gone some of the way, but I am sure that will be a subject of further debate in the time to come. I just flag that disappointment in the small business community.
On the issues around the amount that should be considered part of consumer goods and the allowance for small business: the fact that that has been provided for is quite encouraging. The recommendation from the Senate committee to carry forward the exemption from the trade practices law to cover architects and engineers is welcome. We think that was a sensible move. It is still not clear to the opposition why the recommendation around risk based reporting was not accepted. It seemed to be a practical and sensible response that put effort where it was justified and did not gum up normal business transactions with potentially repeated reporting of similar issues or incidents. This seems a strange position for the government to take. However, the ComLaw register identified 9,997 new or amended regulations introduced by the Rudd government up until the beginning of March this year and the repeal of only 52. It is hardly one in, one out. There is a tendency to embrace heavy intervention and heavy-handed regulation and perhaps that is the reason why this risk based reporting system has not been accepted and this desire for incident-by-incident based reporting has been maintained. The fog may clear on that. We do not know as we have not had a satisfactory explanation of why that is the case.
The changes to the section relating to carrying forward existing reporting schemes are a positive move, as are the changes to the section that appeared to create an obligation on business suppliers to report on competitors’ products. I am pleased that has been embraced by the government. There have been some changes to the unsolicited consumer agreement aspect, which are welcome. They relate to contact in relation to the supply of goods and services after contact details have been provided and the prominent purpose for providing those details was not necessarily the supply of goods and services, and also issues around missed calls and the like. I think they are all positive steps in the right direction and I congratulate the government for the steps it has taken. I look forward though to a serious examination of how this bill operates in reality.
I should declare a pecuniary interest: my darling wife is involved with the Body Shop at Home program, which is an area of direct selling. She is not only vivacious and the light of my life but also an outstanding retailer, as was reflected in our own former retail business. She has carried those skills forward as we juggle the cost-of-living pressures that seem to have been so turbocharged by the Rudd Labor government. While I am representing the electorate she is doing a remarkable job of being a wonderful mother and also seeking to bring extra income into the house. I use the Body Shop as an example but this applies equally to a range of other direct-selling mechanisms. These are techniques of bringing goods and services to the market in a non-traditional manner—that is, not through a retail store. Avon, the Body Shop, Nutrimetics and all these guys are involved in arrangements that do not seem to have been accommodated well in the machinery of this bill.
As happened last weekend, if my wife were involved in a Body Shop party in Langwarrin and people were keen to purchase some of the products, this concept of a cooling-off period and an inability to accept payment within a certain period of time would ignore the nature of that transaction; it would just completely ignore that point. Even in relation to supply of the goods that have been purchased—you know, saying, ‘May I recommend to you, Sir, the vitamin C range from the Body Shop; I am sure that would combine very well with the climate in Tasmania’—if someone is buying some stuff through that mechanism they actually want it as soon as they can get it, yet there are some concerns that that sales channel is not well conceptualised within the framework of this bill.
These were issues raised at the Senate Economics Committee inquiry. They are issues that DSA, the Direct Selling Association of Australia, sought to have canvassed. They were frustrated about poor consultation about these things. They have not to this date received a formal response to their concerns, but these are still real issues. The aspect that they are concerned about where there are independent distributors involved is the prohibition of supply and payment for goods during the cooling-off period—a completely contrary concept to what people want; they want their stuff as soon as they can get it. There are also issues around point of sale documentation and even questions about the receipt of payment.
Many of these provisions just pick up stuff that is already in state and territory laws, and in respect of the payment and supply issues this has not been a good way to go. There is no jurisdiction that restricts supply of goods, so that pick-up of existing state and territory laws has not happened in this case, yet this concept is being introduced into the bill and there is no road testing or experience in the state and territory jurisdictions to point to how that may work. This will present some problems about payment options and the rescinding of contracts after cooling-off periods. The point I am making is that transactions are not always carried out in a comfortable, familiar way. Retailing is not only done in retail outlets; there are other retail channels for consumables that use a range of technologies, and we need to be mindful that these concepts have to be adaptable enough to take account of what the contemporary marketplace is.
Sales channels in many cases are built on personal relationships. This is an underpinning of the trust people have in the product and the provider. Technology and consumer demands are placing pressure on traditional business models, and that does not always mean that store selling is the way to go. There are new technologies and new modes of marketing and sales that need to be reflected in these laws. We do not know how well these laws will accommodate the changing face of commerce. I accept that there will be some road testing and I imagine that, whichever side of parliament occupies the government benches, we will need to revisit some of this stuff. Some of the concepts are new and, as I have just touched on in those examples, some of them are untested and there is no case history to point to how well they are going.
The issue that I would like to extend further into is new technologies. I was speaking with eBay just last week, and they are quite concerned about how these provisions may impact on their business model. They are providing and facilitating a marketing and distribution channel without taking any custodial or proprietary interest in the products that are being sold through that channel. But, to the extent to which warranty expectations are already a part of their business, with people purchasing online using the mechanisms available through eBay, finding that that experience is not quite what they wanted as customers and then going back to eBay to raise the points with eBay, they are saying, ‘These aren’t our products. We are not endorsing the products; we are just facilitating a transaction between parties.’
I suppose eBay’s concern is that with this belief that they are somehow embedded in that transaction and with the warranties that are being implied in this bill they will be caught up in that even more. Again, we do not know whether that issue will materialise or not. What I do understand is that about one-third of eBay customers are churned each year, and eBay’s research suggests that that often has much to do with people’s dissatisfaction with a transaction from a buyer or seller point of view. It is not the technology, the platform or the marketing process that eBay facilitates but the parties that make use of it, yet eBay comes within that experience and is often contacted by people looking for a remedy for a transaction that they were not happy with.
These are a couple of areas that we need to look for and where we need to look at how they evolve over time. We need to recognise that this is an effort to bring together quite a range of concepts in competition consumer protection. I am all for protection for consumers. The ‘fit for the purpose’ concepts that are being embraced in here are quite well understood and appreciated but, as I have touched on, some of the other mechanisms are unproven and do not represent best practice by states and territories because they have not road-tested some of these. In other areas I am talking about a change in the nature of commerce and saying that even the traditional tools might not have the utility and the flexibility to cope.
The coalition is supportive of the passage of this bill. I again flag a need for all of us in this parliament—for whoever is in government after the next election—to re-examine the practical reality that emerges from these new provisions. The sense that small business was promised much about unfair contracts and then, in other areas, treated as consumers for the purposes of some transactions but then not treated as consumers for the purposes of other contractual terms and protections that are available to consumers is very bemusing. It is something that has the small business community quite upset. It is a bit like the debate around good faith conduct, which apparently according to the government, is such an incredibly difficult concept to have operating in some areas of commerce. Franchising is a notable one, yet in this parliament this week two bills are being debated. Not only is good faith talked about; it is actually legislated. There is a bit of eclectic behaviour and corporate knowledge that seem to pop up in different parts of the government’s rhetoric but disappear in other parts. There is no coherence as to how these concepts are embraced in the laws being debated by this parliament.
I congratulate the shadow minister and acknowledge that he has been accommodating and collaborative. I have also found him to be thus with regard to the Trade Practices Amendment (Infrastructure Access) Bill, which will be debated later. I think it reflects the season of trying to get stuff through this chamber and over to the other place as a non-controversial bill that will see its passage before the winter recess, because we might not be back for this parliament. When we are back next time it may be another parliament. On that note, I wish you well—but not too much luck—Mr Deputy Speaker Sidebottom. I commend the bill to the House.