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Wednesday, 17 March 2010
Page: 2718


Dr EMERSON (Minister for Small Business, Independent Contractors and the Service Economy, Minister Assisting the Finance Minister on Deregulation and Minister for Competition Policy and Consumer Affairs) (9:49 AM) —I move:

That this bill be now read a second time.

The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 is a bill to amend the Trade Practices Act 1974, the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001 to implement decisions made in 2008 by the Council of Australian Governments to introduce a single national consumer law—to be called the Australian Consumer Law.

This bill is the second legislative step to give effect to the most far-reaching consumer law reforms since the inception of the Trade Practices Act 35 years ago.

It completes the initial text of the Australian Consumer Law, following on from the Trade Practices Amendment (Australian Consumer Law) Bill, which I introduced on 24 June 2009.

This bill reflects the efforts and toil of many people, including my state and territory colleagues on the Ministerial Council on Consumer Affairs, which, on 4 December 2009, agreed to the content of the Australian Consumer Law. The personal commitment of my ministerial council colleagues has ensured that this landmark reform of Australia’s consumer laws will—at long last—happen, the Australian Senate permitting.

The complex array of 17 national, state and territory generic consumer laws, along with other provisions scattered throughout many other laws, must be rationalised.

While these laws may work well for many purposes, each of them differs and that is to the cost of consumers and business.

Australian consumers deserve laws which make their rights clear and consistent, and which protect them equally wherever they live. At the same time, Australian businesses deserve simple, national consumer laws that make compliance easier.

A single national consumer law is the best means of achieving these results. Rather than relying on nine parliaments making piecemeal changes, the Australian Consumer Law will ensure responsive consumer laws with a truly national reach.

In developing the reforms contained in this bill, the Australian government, in close consultation with the states and territories, has also drawn on the views of many consumers and businesses, and those bodies which represent their interests. I thank those many people who have provided the government with the benefit of their views and expertise in preparing the legislation.

I also thank the many state and territory officials who have contributed to the development of the Australian Consumer Law, as well as, of course the Treasury officials who have worked tirelessly on this reform.

The reforms implemented by this bill represent one of the great successes of the Business Regulation and Competition Working Group of COAG—which I co-chair with the Minister for Finance and Deregulation—and are a great example of cooperation between Australia’s governments.

Progress of the Australian Consumer Law

The bill completes the initial text of the Australian Consumer Law.

In July 2009, the government, with the states and territories, settled an intergovernmental agreement that will govern the future administration and development of the Australian Consumer Law.

In accordance with the intergovernmental agreement, the Australian Consumer Law incorporates the current consumer protection and unconscionable conduct provisions of the Trade Practices Act. It creates national laws for consumer product safety and for statutory consumer guarantees, to reform and replace existing Commonwealth, state and territory laws.

The Australian Consumer Law enhances the consumer provisions of the Trade Practices Act by drawing on existing legislative approaches to these matters in the states and territories.

The bill also implements measures that complement, but do not form part of, the Australian Consumer Law and makes consequential amendments of a minor nature to other acts.

It changes the name of the Trade Practices Act to the Competition and Consumer Act 2010—a name which is much more accessible and which reflects the focus of Australia’s main law which regulates markets.

It also amends the consumer protection provisions of the ASIC Act and the Corporations Act to maintain consistency with the Australian Consumer Law concerning consumer protection for financial services.

The bill enables the Australian Competition and Consumer Commission to impose infringement notices for specified civil contraventions of the Australian Consumer Law. It strengthens product safety enforcement and investigation powers to assist agencies in taking a proactive approach to consumer safety.

It strengthens the enforcement arrangements for prescribed industry codes of conduct—like the Franchising Code of Conduct—by implementing the government’s response to the report of the Parliamentary Joint Committee on Corporations and Financial Services into conduct in Australian franchising.

The entire Australian Consumer Law is to be fully implemented by the end of 2010 by the Australian government and each state and territory government in accordance with the National Partnership Agreement to Deliver a Seamless National Economy.

Key amendments in the bill

I turn now to the key provisions of the bill.

The Australian Consumer Law

The first bill to implement the Australian Consumer Law provides for the application, administration and amendment of the Australian Consumer Law creates the national unfair contract terms regime and introduces new penalties, enforcement powers and consumer redress provisions.

This bill that I am introducing today implements general and specific consumer protections, including prohibitions against misleading and deceptive conduct and unconscionable conduct, and provisions covering unfair practices and consumer transactions. Many of these consumer protections are substantially the same as those in the Trade Practices Act—although they have been redrafted to reflect modern, easier to comprehend drafting conventions—and draw variously on the existing legislative approaches in the states and territories, and in New Zealand.

The case law associated with the understanding and interpretation of these protections—and the equivalent provisions in state and territory fair trading laws—will continue to be relevant to the interpretation and application of the Australian Consumer Law.

This bill also introduces a new system of statutory consumer guarantees which reform and replace existing Commonwealth, state and territory laws, and a new, standard consumer product safety law for consumer goods and product related services.

General protections

The Australian Consumer Law contains general consumer protections, including a national unfair contract terms law. It prohibits misleading or deceptive conduct and includes provisions prohibiting persons who are operating in trade or commerce from engaging in unconscionable conduct towards consumers or businesses. These prohibitions will operate on the same basis as those currently in the Trade Practices Act. In addition, corporations are prohibited from engaging in unconscionable conduct within the meaning of the unwritten law of the states and territories.

I also recently announced that the government will make clarifying amendments to the unconscionable conduct provisions, which will be introduced in a separate bill.

Specific protections

The Australian Consumer Law provides for a wide range of specific consumer protections covering unfair practices, consumer transactions, the safety of consumer goods and product related services, information standards and the liability of manufacturers for goods with safety defects.

Unfair practices

Specific business conduct that is generally accepted as being unfair is prohibited under the Australian Consumer Law. These prohibitions are targeted at particular kinds of activities rather than the effect that more general conduct might have on a consumer.

The Australian Consumer Law incorporates equivalents to all of the existing provisions of the Trade Practices Act dealing with false or misleading representations or conduct, unsolicited supplies, pyramid schemes, pricing, referral selling, and harassment and coercion. Changes to existing Trade Practices Act provisions which are based on provisions that now exist in state and territory consumer laws are also incorporated to improve the operation of the existing provisions by adopting best practice in state and territory laws. These changes were agreed by the Ministerial Council on Consumer Affairs on 4 December 2009.

Consumer transactions

The Australian Consumer Law implements specific protections relating to consumer transactions, including consumer guarantees, unsolicited selling, lay-by agreements and other unfair practices.

Consumer guarantees

A single set of statutory consumer guarantees replaces the existing system of implied conditions and warranties in the Trade Practices Act under state and territory laws. Statutory consumer guarantees will give consumers clearer and more effective laws regarding their rights when buying goods and services. They will also make business obligations clearer.

These reforms are to be supported by administrative changes and changes to enforcement regimes to make the law more effective, through greater coordination of enforcement and better provision of information to consumers and businesses. These reforms are based on comprehensive analysis by the Commonwealth Consumer Affairs Advisory Council, which examined all of these issues in 2009. Those well-considered recommendations were adopted by the Ministerial Council on Consumer Affairs on 4 December 2009. I thank the council for its excellent contribution to the development of this reform.

The consumer guarantees law is closely aligned to the existing New Zealand law, and I also thank my New Zealand colleague the Minister of Consumer Affairs, the Hon. Heather Roy MP, on the ministerial council for the contributions that Minister Roy and her officials have made to the development of these reforms. Indeed, this reform reconfirms the commitment of our two nations to a single economic market.

Unsolicited selling

While unsolicited selling methods may often be convenient for consumers, bad conduct by unscrupulous operators can, in some cases, lead to serious harm.

The Australian Consumer Law introduces a national law that deals with unsolicited sales practices, including door-to-door selling, telephone sales and other forms of direct selling which do not take place in a retail context. The provisions replace the current state and territory regulatory regimes that apply to unsolicited sales. They do not apply to matters already covered by the Commonwealth Do Not Call Register Act 2006 and associated legislation.

The law contains express supplier obligations about the way in which consumers are approached and about the making of agreements, including permitted visiting hours; disclosing the purpose and identity of the supplier; duties imposed on suppliers to leave premises on request; and informing a consumer of their right to terminate the agreement.

The Australian Consumer Law also contains express disclosure obligations for suppliers about the making of agreements, express consumer rights and obligations, including a 10-day termination right and the grounds for termination, and express supplier obligations about post contractual behaviour.

Lay-by agreements and miscellaneous unfair practices

The Australian Consumer Law applies some basic rules to lay-by sales transactions, including basic consumer rights and business obligations. This will replace the various lay-by sales laws that currently exist in New South Wales, Victoria and the ACT.

Information standards

Under the Australian Consumer Law, the Commonwealth will prescribe all information standards for goods and services. This will require suppliers to provide certain information or present information in a certain manner, when supplying particular goods and services. These standards replace existing powers in the Trade Practices Act and in state and territory laws.

Safety of consumer goods and product related services

The Australian Consumer Law also introduces a national consumer product safety law for consumer goods and product related services. This new product safety framework will replace the product-safety provisions in the Trade Practices Act, and the equivalent provisions of the state and territory consumer protection laws.

Under the national consumer product safety law, the Commonwealth will be able to make safety standards for the supply of certain goods or services. The Commonwealth will have the power to impose interim and permanent bans on certain goods or services which pose a risk to consumer safety. All responsible ministers from the Commonwealth, states and territories can recall goods which create a risk of injury to any person, as well as publish safety warning notices to inform consumers about safety investigations or warn consumers of the potential dangers with using particular goods and services.

Suppliers who voluntarily recall a good because of potential safety concerns are required to notify the Commonwealth minister about the recall. The minister may choose to publish details of the recall on the internet.

These provisions include a new reporting requirement to assist regulators to proactively respond to emerging consumer product safety hazards.

Suppliers must report to the ACCC if they become aware that a consumer good or related service has been associated with a death or serious injury. Businesses may become aware of incidents through consumer complaints, legal proceedings or other means. A business is not required to investigate, or otherwise make itself aware of an incident that they do not become aware of in the ordinary course of their business.

A business does not need to report incidents where the product, design flaw or defect is clearly not the cause of the incident, such as when a consumer trips over a product in a store.

Liability of manufacturers for goods with safety defects

The new national consumer product safety law is supported by a national statutory liability regime to enable consumers to recover against manufacturers of goods that contain safety defects, for any loss or damage suffered as a result of the defects. It is modelled on the manufacturers’ liability provisions of the Trade Practices Act, and provides manufacturers with a number of defences against action that has been brought against them.

Offences, enforcement and remedies

The Australian Consumer Law provides for a national approach to enforcement which will mean that regulators can take effective and proportionate action against unprincipled operators.

Contraventions of specific consumer protections in the law have associated criminal offence provisions. These cover unfair practices, unsolicited consumer agreements, lay-by sales, safety of goods and product-related services and information standards. Most of these offences exist in the Trade Practices Act and carry maximum fines of $220,000 for a person other than a body corporate and $1.1 million for a body corporate.

Regulators can accept administrative undertakings, and will have the power to issue substantiation notices and public warning notices.

A suite of remedies is available for contraventions of certain provisions of the law. These include civil pecuniary penalties, injunctions, damages, compensation orders, orders seeking redress for consumers not party to enforcement proceedings, non-punitive orders, adverse publicity orders and an order disqualifying a person from managing a corporation.

Defences

The Australian Consumer Law provides for a number of defences to contraventions of consumer protection provisions in certain circumstances relating to the publication of advertisements or the supply of certain goods or product-related services that were not compliant with a safety or information standard outside Australia.

Remedies for consumer guarantees

In addition to the general remedies available under the law, consumers can take action against suppliers of goods and services, and action for damages against manufacturers of goods, where a relevant guarantee is not complied with. The provisions cover rejected and replaced goods, and the termination of contracts.

Amendments to the Trade Practices Act

In addition to completing the Australian Consumer Law, schedule 2 of the bill creates an infringement notice regime for the ACCC, which is the same as in the first bill. The bill that I am introducing today strengthens product safety enforcement and investigation powers and amends the industry codes of conduct.

Infringement notices

The ACCC can issue infringement notices for most breaches of the Commonwealth applied Australian Consumer Law. Infringement notices provide penalties that can be paid to avoid further court action by the ACCC. However, unlike traditional parking fines, these notices are not enforceable by a court and non-payment means only that the ACCC may still pursue them for the original alleged breach.

The infringement notice power in the law also serves as a template for the states and territories to apply to breaches of the Australian Consumer Law, if they choose to do so.

Product safety investigation and enforcement

Schedule 2 of the bill provides for enhanced entry, search and seizure powers for the ACCC in respect of product safety, as well as information gathering powers and the ability to apply to a court to order the destruction of goods that pose a risk of injury to any person. These powers assist the ACCC to take on a lead enforcement role in the national product safety system established by the Australian Consumer Law.

Conclusion

This bill marks an exciting and important development in Australia’s consumer protection laws. It introduces reforms that will significantly reduce regulatory complexity for businesses and takes Australia further towards a seamless national economy. It will empower Australian consumers and free Australian businesses to make our markets work better—delivering tangible benefits for all.

I can also inform the House that the Ministerial Council for Corporations was consulted in relation to the amendments to the laws in the national corporate regulation scheme—namely the amendments to the ASIC Act and the Corporations Act—and has approved them as required under the Corporations Agreement.

In introducing this bill, the Australian government has met its obligation to introduce a single, national consumer law, which is among the most important of the 27 regulatory reforms currently being pursued through COAG.

The Australian government hopes to pass this legislation in the winter sittings to achieve, with further cooperation by state and territory governments, our goal of a single consumer law for Australia by the beginning of 2011.

This will enable, for the first time, all Australian consumers to enjoy the benefits of consistent rights wherever they may be, and will allow all Australian businesses to obtain greater efficiencies through a single, simplified national law.

I commend the bill to the House.

Debate (on motion by Mr Billson) adjourned.