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Monday, 26 October 2009
Page: 7070

Senator WONG (Minister for Climate Change and Water) (6:29 PM) —I table a revised explanatory memorandum relating to the Education Services for Overseas Students Amendment (Re-registration of Providers and Other Measures) Bill 2009 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—


Mr Speaker, much has been said about the International Education sector in Australia over recent months. Nearly half a million students come to study every year. They live here, work here and pay taxes. They contribute to our multicultural society while they gain skills and knowledge to take home.

Many in this place have joined me in condemning the recent appalling acts of violence against some students. Many too share my concern about the industry, growing so rapidly, with insufficient checks and balances, unfortunately attracting a small number of unscrupulous operators for whom the provision of quality education is not their first motivation.

Recently I announced that Bruce Braid, the former Liberal Member for Cook, would head up a review of the Education Services for Overseas Students Act 2000. I look forward to working with Bruce on this major piece of work.

Today I am introducing a Bill, The Education Services for Overseas Students Amendment Bill 2009, which makes adjustments to the operation of the current Bill, the Education Services for Overseas Students Act 2000.

The changes to this Act will require the re-registration of all institutions currently registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) by 31 December 2010.

Further, it clarifies the application of various provisions and to introduce processes that will increase the accountability of international education and training services providers under the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007. The Bill will also seek to make international education providers’ use of education agents more transparent and accountable.

The National Code is a set of nationally consistent standards that govern the protection of overseas students and the delivery of courses to those students by providers registered on CRICOS. Only CRICOS courses can be offered to international students studying in Australia on a student visa.

The National Code is established under the Education Services for Overseas Students Act 2000. To become CRICOS-registered a provider must demonstrate that it complies with the requirements of the National Code. In recommending a provider for registration, the state or territory Designated Authority must also be satisfied that the provider is fit and proper to be registered.

Re-registration of all providers is intended to restore confidence in the quality of the Australian international education sector and to strengthen the registration process by reducing the number of high-risk providers currently in or seeking entry into the sector. To this end, two new registration criteria are introduced in this Bill. These are that the provider must have the principle purpose of providing education and that the provider has demonstrated capacity to provide education of a satisfactory standard.

Mr Speaker, we want to ensure that educational institutions providing courses for international students can be assured that their courses are the highest possible quality. We want our international visitors who come here to study know that the Government is looking after their interests.

The State Governments have already started rapid audits of providers, and these will be extended so that all providers working with international students will need to show they have the best interests of the students at heart - not simply a profit motive.

We know that most providers are doing their right thing, but we need to weed out the shonky operators. We’ll take advice from the Baird review, but this is the first, important step in the process of cleaning up an industry that has grown too fast, too soon.

The message to providers is, if you’re not providing your students with a quality education in a safe environment, clean up your act or risk being shut down.

The National Code is a legislative instrument. Breaches of the National Code by providers can result in enforcement action under the Act. This includes conditions on registration, suspension or cancellation of registration.

The Bill will require a registered provider to maintain a list of all of the persons (whether within or outside Australia) who represent or act on behalf of the provider in dealing with overseas students or intending overseas students. The registered provider will be required to publish the list of those agents either on its web site or in any manner prescribed by the Regulations. The Bill will also provide for regulations to be made dealing with providers’ agents. These regulations will be developed with a view to providing further protections for overseas students through such measures as only allowing providers to deal with agents who have undertaken prescribed training, and to only select agents that are registered in their home countries - if such requirements exist in those countries. The Regulations may also prescribe a requirement on providers to host a website that would allow students to make anonymous comments about their experience with agents. These requirements are currently being considered and will be finalised through consultation with key stakeholders.

The Bill will also strengthen the efficacy of suspensions imposed on a provider’s CRICOS registration and reduce the risk of unreasonable financial detriment to a provider arising from a suspension. The Bill will provide flexibility by giving the Minister the discretion to enable a provider to solicit or accept money for a course from an overseas student (or an intending overseas student) for part or all of the period of a suspension. This flexibility will allow the Minister to adjust the sanction in a manner commensurate with the level of the breach and also have regard to the individual circumstances in each case.

In addition the Bill will facilitate the national alignment of the regulatory actions taken by the Commonwealth, State and Territory education authorities relating to the delivery of courses to overseas students. The Bill will permit conditions imposed by a State or Territory designated authority to be recognised and adopted by the Commonwealth at the time of effecting the CRICOS registration of the provider or at any time after registration. The Bill will also provide a discretionary capacity to modify the duration or circumstances in which any condition imposed is to apply.

The Bill will also lessen the financial and regulatory burden on providers who may be simply changing their legal entity for the purpose of improving business operations in circumstances where the delivery of courses and outcomes for international students will not be affected.

The Bill will also enable the Regulations to prescribe the criteria to be applied in considering whether a particular course is a suitable alternative to the obligation otherwise imposed on a registered provider to refund monies paid by a student.

Once this Bill is passed by the Parliament, hopefully in a timely way to ensure these measures can commence quickly, the cooperation of the States and Territories, along with the providers and many other stakeholders of the industry will be required. I would like to take the opportunity to thank those groups for the wiliness already displayed to address the current concerns and look forward to working with them to strengthening our International Education Sector.

These amendments improve the protections already in place for both students and the industry.


This Bill will continue existing transitional long service leave arrangements that apply to Telstra and its employees, pending development of national long service leave arrangements. The Bill will avoid unnecessary administrative complexity for the company and uncertainty for employees, and recognises the unusual position that Telstra finds itself in as a result of historical circumstances.

Telstra was originally a government-owned and operated entity and as such its employees were formerly Australian Government employees covered by Commonwealth employment-related legislation, including the Long Service Leave (Commonwealth Employees) Act 1976.

The Telstra (Transition to Full Private Ownership) Act 2005, enacted by the previous Government, provided that Commonwealth employment-related legislation ceased to apply when the Commonwealth ceased to have a majority control of the company. However, the Long Service Leave (Commonwealth Employees) Amendment Act 2006 deferred this change in relation to long service leave for three years - meaning that Commonwealth long service leave legislation would continue to apply until 24 November 2009. At that time Telstra employees would be covered by relevant State or Territory laws.

As we have previously announced, the Government intends to develop a national long service leave scheme, in consultation with the States and Territories. These arrangements will form part of the National Employment Standards in the Fair Work Act 2009.  Consultations on this new national scheme have commenced and are ongoing.

The fact that Telstra has been subject to Commonwealth long service leave legislation, and that this coverage will cease on 24 November 2009, puts it in an unusual position.

Telstra will need to transition from the Long Service Leave (Commonwealth Employees) Act to multiple State and Territory schemes when current arrangements expire on 24 November 2009, and then back to a Commonwealth scheme when new national arrangements are implemented. To avoid the complexity and uncertainty that this will cause, Telstra and relevant unions have suggested to the Government that existing transitional arrangements be retained until the new National Employment Standard on long service leave is put in place.

The Government considers this to be a sensible proposal, and is happy to facilitate it by making minor amendments.

The effect of this Bill is to extend the transitional application of the Long Service Leave (Commonwealth Employees) Act to Telstra and its employees. This will preserve the status quo for Telstra employees with respect to long service leave entitlements until national long service leave arrangements are put in place through the National Employment Standards.

This Bill will amend the Telstra Corporation Act and the Telstra (Transition to Full Private Ownership) Act to enable the Long Service Leave (Commonwealth Employees) Act to continue to apply to Telstra.

The Bill will also make consequential amendments to the Long Service Leave (Commonwealth Employees) Act.

The Government considers that this Bill is a desirable transitional measure that recognises the particular circumstances of Telstra and its employees. It preserves the status quo pending development of national long service leave arrangements for all federal workplace relations system participants.


The Government is delivering an ambitious regulatory reform agenda.

Well-designed and targeted regulation is essential to reducing costs and complexity for business and the not-for-profit sector and forms a key part of the Government’s commitment to microeconomic reform.  Well designed regulation will raise Australia’s potential economic growth rate through increasing Australia’s productivity and international competitiveness, and fostering innovation and structural flexibility.

Our policy approach is both far-sighted and comprehensive.  The Prime Minister, speaking as Opposition Leader in April 2007, set out a wide-ranging better regulation agenda to systematically reduce the level of poorly designed and ineffective regulation on Australian business.  The Prime Minister committed the Government to maintain rigorous regulatory impact analysis to protect business from new, unnecessary regulation as well as to reform existing regulation.

The Government’s systematic approach contrasts with episodic regulatory reform efforts by previous Australian Governments, which have not been sufficient to deliver continuous improvement in the quality of regulation.  Since taking office, the Australian Government has established an institutional and policy framework which consciously reflects the OECD’s best practice principles for regulatory quality and performance.

Advocacy for better regulation has been significantly strengthened by giving it explicit Cabinet-level status.  The Government has strengthened Regulatory Impact Analysis (RIA) requirements, by combining the efforts of the Office of Best Practice Regulation with a new deregulation policy function within the Department of Finance and Deregulation.  A “one-in one-out” approach to regulatory proposals has been adopted as part of a range of measures to assist in managing in the regulatory stock.

Strengthened policy oversight processes are providing greater quality assurance in respect of new regulatory proposals, improving policy design and providing a capacity to more readily target inefficient regulation.

Accompanying these structural initiatives to embed better regulation practices, I am undertaking a range of regulatory reform measures that will deliver clear benefits to business and the economy.

This bill is an immediate down-payment on the Government’s commitment to continuously clean up red-tape.  It proposes to amend or repeal almost 30 Acts where the provisions no longer have any function or purpose, including the Income Tax (Franking Deficit) Act 1987 and a number relating to the removal of the digital data service obligations.

In addition to this Bill, the Government is undertaking a wider regulation clean up exercise, which I expect will result in over 200 pieces of unnecessary subordinate legislation being removed during 2009.

These redundant regulations were identified through a stocktake of redundant regulation undertaken by all Commonwealth departments during 2008.  Such an exercise has never been done before.

Leaving outdated, redundant regulation on the books is not just sloppy housekeeping.  It increases the costs for business by making it harder to identify which rules apply as well as increasing the probability of inconsistent or overlapping rules.

Further, the Government has initiated a major review of the stock of existing regulation.  As announced in the 2008-09 Updated Economic and Fiscal Outlook, a review of pre-2008 subordinate legislation and other regulation is underway, to document those regulations which impose net costs on business and to identify scope to improve regulatory efficiency.  Around 30,000 subordinate instruments are being reviewed to identify reform priorities.

Several reform projects are already underway through Ministerial Partnerships.  My partnership with the Minister for Financial Services, Superannuation and Corporate Law to develop streamlined, accessible financial services product disclosure statements (PDS) to replace the current lengthy and unduly complex documents has delivered a comprehensive and informative Product Disclosure Statement for First Home Saver Accounts, which extends to a mere four pages.  We are now working on simplifying other financial services product documentation for both consumers and business.  Further, I am working in partnership with the Minister for Health and Ageing to review existing health technology assessment processes to wipe out the unnecessary regulatory costs inherent in the existing system and to enable people to get earlier access to innovative and cost-effective new health technology.

The Government has responded to the Productivity Commission’s two Annual Reviews of Regulatory Burdens on Business covering the primary, manufacturing and distributive trades sectors, accepting or accepting in principle 68 of the Commission’s 84 responses.  The forthcoming Productivity Commission report on regulatory burdens faced by business in the social and economic infrastructure services offers further scope for regulatory improvement.

Our agenda also encompasses cross-jurisdictional regulation.  Business has long indicated concerns with obstacles to competitiveness through costs generated by inconsistent and duplicative regulatory regimes across the Commonwealth, states and territories.

On 29 November 2008, the Council of Australian Governments (COAG), which facilitates inter-jurisdictional cooperation on matters of common policy interest, agreed to reduce costs to business by committing to reform in 27 separate areas of cross-jurisdictional regulation.  The agreement will provide the State and Territory governments with funding of up to $550 million over five years to facilitate and reward these national regulatory reforms and deliver a seamless national economy.

The COAG Business Regulation and Competition Working Group (BRCWG), which I co-chair with Dr Craig Emerson, the Minister Assisting me on Deregulation, is taking forward these reforms.  Substantial progress is continuing on a number of fronts:

  • reforms to the regulation of consumer credit which will collapse the eight separate regimes run by the States and Territories into a single uniform national system overseen by the Commonwealth, will come into effect on 1 January 2010;
  • state and territory based regulation of trustee companies will be replaced by a national regulatory scheme - removing around 300 pages of separate and sometimes contradictory state-based regulations with one, clear national regime; and
  • the Standard Business Reporting (SBR) initiative will enable businesses to report to a range of Australian and state and territory government agencies using a standardised reporting framework, simplifying reporting and saving Australian businesses close to $800 million per year when fully implemented.

Finally, in recognition that regulatory reform is a continuing challenge, the Government requested the OECD to undertake a review of regulatory settings and policy development processes in Australia.  The review will provide valuable insights to support the Government’s commitment to strengthened processes for regulation making and review and better regulatory outcomes.  I have asked the OECD to report its findings by December this year.

The challenge for all governments in these times of global economic stress is to maintain microeconomic reform efforts directed at enhancing productivity, competitiveness and growth potential, including through a sustained commitment to better regulation.  This Bill is an important step in delivering on the Government’s commitment to continuous improvement in regulation.

I commend the Bill.


An historic reform

The Trade Practices Amendment (Australian Consumer Law) Bill is a Bill to the amend the Trade Practices Act 1974  and the Australian Securities and Investments Commission Act 2001 to implement commitments made in 2008 by the Council of Australian Governments to introduce a single, national consumer law —to be called the Australian Consumer Law.

The features of the Australian Consumer Law to be implemented by this Bill are the new, national unfair contract terms law and new penalties, enforcement powers and options for consumer redress in relation to the consumer protection provisions of the Trade Practices Act and the ASIC Act. 

This Bill is the first legislative step to give effect to the most far-reaching consumer law reforms in at least a generation.

Australia’s generic consumer laws are, for the most part, effective.  But, as the Productivity Commission found in its Review of Australia’s Consumer Policy Framework, they can be much better. 

We now have 13 generic consumer laws in force nationally and in the states and territories.  Broadly speaking, they look similar, but each of them differs - to the cost of business and consumers.  And, there are differences in the way these laws are enforced by Australia’s consumer regulators.  There are also numerous industry-specific laws which provide a host of additional consumer protections, but which add yet further complexity. 

As we move towards a single, national market - a seamless national economy as called for by the Business Council of Australia and the 2020 Summit - this maze of consumer laws must be rationalised.  We must reduce confusion and complexity for consumers and provide consistency of consumer protection.  We must reduce compliance burdens for business.  We need more proportionate, effective and nationally consistent enforcement. 

In undertaking this task, the Government has benefited from the work of the Productivity Commission, which identified the solutions that we are now implementing.

The Business Regulation and Competition Working Group of COAG - which I co-chair with the Minister for Finance and Deregulation - has been given the task of advancing a regulatory reform agenda covering 27 areas of regulation.  Reform of consumer laws is among the most important of these 27 reforms.  In September 2008, the Business Regulation and Competition Working Group considered detailed proposals for a national consumer law developed by the Ministerial Council on Consumer Affairs.  The Working Group recommended COAG’s agreement to establish a single national consumer law.

On 2 October 2008, COAG agreed to establish a national consumer law that is based on the existing consumer protections in the Trade Practices Act, draws on best practice in existing state and territory laws and includes a national unfair contract terms law. 

The current environment

Amidst the worst global recession in 75 years, Australians are facing serious economic challenges.  In confronting those challenges, we have to deal with complex, sophisticated markets.  Marketing is becoming cleverer.  Consumers can now shop on-line and through their mobile phones.  They have access to money through new and sophisticated payment systems.  And, the range of goods and services available today is enormous.

This Bill will introduce changes that will make life easier for all consumers - through clearer, fairer standard-form contracts and more effective enforcement of our consumer laws.

The sophistication of modern consumers and the complexity of modern markets means that we need laws —national laws —that can keep pace with these changes. 

A single national law, supported by better policy development and decision-making processes, is the best means of achieving better results for consumers and business.  Rather than relying on nine parliaments to make changes, this new framework will ensure responsive consumer laws with a truly national reach.  The government has, with the states and territories, negotiated an Intergovernmental Agreement to set in place arrangements for future changes to the Australian Consumer Law, and allow for cooperation on policy development and enforcement. 

Overview of the Bill

The Bill is the first legislative instalment of the Australian Consumer Law reform process.  The Bill will establish the legislative underpinnings of the Australian Consumer Law.  It will also introduce laws to deal with unfair contract terms in consumer contracts, which can be applied in every state and territory from the date of their commencement at the national level.  And it will introduce new penalties and enforcement powers for the Australian Competition and Consumer Commission and the Australian Securities and Investment Commission, together with improved options for consumer redress.

The Bill includes amendments to the ASIC Act as a consequence of the need to maintain a separate legislative framework for the regulation of financial services, which derives from the referral of powers to the Commonwealth by the States in 2001.  The government remains committed to ensuring that there is consistency between generic consumer protections and those that apply to financial services, to the extent that it is practical to do so.

The Bill will also make some minor consequential changes to the Administrative Decisions (Judicial Review) Act 1977 and the Telecommunications (Interception and Access) Act 1979.

The government will introduce a second instalment of reforms in 2010 to complete the Australian Consumer Law reform process. 

This second Bill will introduce a new national product safety legislative and regulatory regime, as agreed by COAG in July 2008.  And, it will introduce reforms to augment and modify the current consumer protection provisions of the Trade Practices Act, based on best practice in existing state and territory consumer laws.  It will also amend the Trade Practices Act to change its name to the ‘Competition and Consumer Act’.

The entire Australian Consumer Law will be fully implemented by the end of 2010 by the Australian government and each state and territory in accordance with the National Partnership Agreement to Deliver a Seamless National Economy agreed by COAG in November 2008 and finalised in early 2009.

The process for developing the Bill

The last attempt to create a national consumer law was in 1983.  Seven years later, the ‘common’ - and I use that term advisedly - provisions were finally implemented in all jurisdictions.  But, these provisions were not the same for all of Australia’s consumer laws, and jurisdictions soon began to make changes and the laws started to diverge. 

The reforms contained in this Bill —and to be contained in the second Bill —are the culmination of a long policy review and development process undertaken by the Australian government in close consultation with the states and territories.  The Australian government has also drawn on the views of many consumers and businesses, and those bodies which represent their interests. 

In 2007 and 2008 the Productivity Commission reviewed Australia’s consumer policy framework.  And, in May 2008, my predecessor, the now Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services, tabled in the Parliament the Commission’s comprehensive Final Report and recommendations.  These have provided the government with a detailed roadmap for consumer policy reform. 

In July 2008, COAG charged the Ministerial Council on Consumer Affairs with the task of developing a package of reforms based on the Commission’s recommendations.  This resulted in the Ministerial Council settling recommendations for a national consumer law and new enforcement mechanisms on 15 August 2008.  These detailed recommendations were ratified by COAG on 2 October 2008. 

Officials at the Australian government, state and territory levels have worked together to develop these legislative proposals in accordance with COAG’s agreed model.  They will continue to do so in developing the second reform Bill that the Parliament will consider in early 2010.

Expressions of gratitude

Before I go on, let me thank my predecessor, the Hon Chris Bowen MP, and my new state and territory colleagues on the Ministerial Council on Consumer Affairs for their efforts over the past year in securing these reforms.  Their personal commitment to reform has ensured that these reforms will - at long last - happen.

I also commend my Ministerial Council colleagues and their officials for the spirit of openness and cooperation that has characterised the development of the reforms to date.  Indeed, the shared expertise and experience of consumer policy officials in all Australian governments has proven invaluable to their development.  I look forward to working closely with my colleagues and their officials in the future to fully implement this important reform which will nationalise Australia’s consumer laws.

I understand that this spirit of openness and cooperation has also characterised the dealings that my opposition counterpart —the member for Cowper —has had with my predecessor and his office in relation to questions about the content of the Bill.  I look forward to working with him as we deliberate on this Bill. 

I also thank those many people who have provided the government with the benefit of their views and expertise in preparing the legislation, including the members of the Commonwealth Consumer Affairs Advisory Council, consumer, business, legal and academic representatives and the many people who have provided their views in the public consultations conducted by the Productivity Commission, the Standing Committee of Officials of Consumer Affairs and the Treasury.

Key amendments in the Bill

I turn now to the key provisions of the Bill.

Unfair contract terms

Unfair contract terms can impede competition by making contracts difficult to understand.  And they can limit a consumer’s choices and ability to seek out alternative options.  They are used by some businesses to transfer all of the risk in a transaction away from themselves and onto the consumer.

Some members will be familiar with the similar laws that have been in place in Victoria since 2003.  And laws tackling unfair contract terms exist in the United Kingdom, in the rest of the European Union, in Japan and in South Africa.  Laws which allow for the examination of the fairness of contracts and contract terms also exist in jurisdictions in Canada and the United States. 

The government acknowledges the many benefits that flow from using standard-form contracts in business-to-consumer transactions.  They keep costs down and save time.  But, they can often be used as a means of shielding a business from risk in a way which is not fair. 

A poorly constructed contract can be difficult to understand and make it hard to discern what has been actually agreed by the parties —by being complex, long and unclear.

This reform is about making contracts clear in business-to-consumer transactions.  It is about letting consumers have the ability to make an accurate assessment of the risks to them of signing a contract.  And, it is about ensuring that a business assesses its risk properly, and does not use its stronger bargaining position to simply push all risk away from itself. 

The law is not about the government telling business what to put into contracts.  And, it is not about undoing bad bargains and letting consumers walk away from poor choices.


The unfair contract terms law reforms were agreed by COAG in October 2008.  They are based on the extensive consultation process undertaken by the Productivity Commission in relation to Australia’s national consumer laws. 

These reforms are based on the extensive practical experience of the Victorian government in implementing and enforcing similar laws.  They represent an agreement and a commitment by all Australian governments as to what this law should look like. 

Since then the government has sought views on both the reforms more generally —in February —and on an exposure draft of the unfair contract terms provisions —in May.  The Treasury received 102 submissions in response to the February consultation, and more than 70 of these focused on unfair contract terms.  And, in May, Treasury received nearly 100 more submissions on the exposure draft provisions. 

The government has also had numerous meetings with key stakeholders about these changes.  And I understand that the Treasury has met and spoken with a wide range of people about these provisions.

We have consulted, and we have listened.  And this is reflected in the provisions set out in this Bill, which differ in key respects from those that the government exposed in May, particularly in respect of the exclusion of business-to-business transactions at this time.

In relation to the question of whether business-to-business contracts —and particularly those involving small businesses —should be included under the unfair contract terms provisions, the government is currently reviewing both the unconscionable conduct provisions of the Trade Practices Act and also the Franchising Code of Conduct. 

Both of these reviews cover issues relating to the protections afforded to businesses in circumstances where they are dealing with other businesses with greater bargaining power and market power.  In responding to these reviews, the government is seeking the views of businesses —large and small —about the effectiveness of our current laws.  The government will further consider this issue when these reviews are completed. 

The government has also indicated its intention that this Bill should be referred to a Senate Committee, and this issue will —no doubt —be further considered as part of that process. 

The provisions

This reform was recommended by the Productivity Commission and the form of the provisions represented in this Bill reflects —with some refinements —the Commission’s approach. 

In so doing, the drafting of the provisions also takes account of the approach adopted in Victoria and addresses some practical considerations that have arisen in the consultation process for the Bill. 

The national unfair contract terms provisions will only apply to consumer contracts in a standard form. 

Contracts between businesses are excluded from the scope of the unfair contract terms provisions, except in respect of some ‘sole traders’, who may have common business and personal interests.   

A ‘consumer contract’ is defined as a contract for a supply of goods or services or the sale or grant of an interest in land in the Australian Consumer Law as applied by the Trade Practices Act.

In respect of the ASIC Act, a ‘consumer contract’ is a contract that is a financial product or a contract for the supply, or possible supply, of financial services.

In both cases, such contracts are limited to circumstances where the individual whose acquisition of what is supplied under the contract is wholly or predominantly for personal, domestic or household use or consumption. 

The unfair contract terms provisions will cover the supply of any good, service or interest in land —or any financial product or service —to an individual consumer provided that the acquisition of the thing supplied under the contract is wholly or predominantly for personal, domestic or household use or consumption.  The provisions could include some circumstances where individuals intermingle their personal and business affairs in conducting their business activities, provided that anything acquired was acquired wholly or predominantly for personal, domestic or household use or consumption. 

The reforms will provide that terms are void if they are unfair, the contract is a standard-form contract, and in the context of the ASIC Act, the contract is a financial product or a contract for the supply, or possible supply, of financial services. 

A term causing detriment, or a substantial likelihood of detriment, will be unfair where there is a significant imbalance in the parties’ rights and obligations and the term is not reasonably necessary to protect the legitimate interests of the supplier.

The new law will be supported by consistent national guidelines on its enforcement, developed by the ACCC, ASIC and the state and territory consumer agencies.  I expect that the ACCC, ASIC and the state and territory consumer agencies will consult widely with industry stakeholders on draft national guidance, and that the guidance will be made publicly available in good time for the commencement of the provisions. 

In undertaking this important task, our regulators can draw on the extensive enforcement experience and expertise of Consumer Affairs Victoria and of their international counterparts, particularly the UK Office of Fair Trading.

A balance between effective provisions and business concerns

In developing the legislation the government has sought to balance two concerns: the need for the law to be effective and the need for business to have certainty. 

With this in mind, the provisions contain a number of features designed to ensure that they are effective.  Without these features, the government believes that the enforcement of the provisions —whether by individuals or consumer enforcement agencies —would be seriously compromised. 

First, it will be for the party advantaged by a term —usually a business —to rebut the presumption that the term is not reasonably necessary in order to protect its legitimate interests. 

Second, it will be for a party that asserts that a contract which is the subject of a challenge is not in a standard form —again, we expect this would usually be a business —to rebut the presumption that the contract is in a standard form.

In both cases, the issues are matters that the business will know and will be able to introduce the evidence it considers most appropriate to address the question. 

It would impose a huge impediment to enforcement if an individual claimant was required to prove either of these matters, as they are not likely to be able to bring this evidence before a court without disproportionate effort and expense.  Similarly, a regulator would need to use intrusive and expensive coercive information gathering powers to obtain the required information to bring a case. 

To leave out these key provisions would undermine the practicality of these reforms.

Factors to be taken into account

In determining whether a term is unfair a court may take into account any matters that are relevant.  But, the court must take into account some specific issues. 

First, it must take account of the extent to which the term would cause, or is substantially likely to cause, detriment.  Second, the court must take account of the extent to which the term is transparent.  And, third, the court must take account of the contract as a whole.

The question of detriment

The provisions will require the court to consider the detriment, or a substantial likelihood of detriment, arising from the term.  This acknowledges that a consideration of detriment is a key matter to be included in any case concerning unfair contract terms. 

Reference to a ‘substantial likelihood of detriment’ makes it clear that, in order to take action, a claimant does not need to prove that he or she has suffered actual detriment, but that there is a substantial —that is, more than a hypothetical —likelihood of detriment. 

Without a term ever being enforced, it can still have the effect of causing customers to act in ways that may not be in their own best interests.  This is no different to any situation where a party can seek an injunction and without this sort of relief many harmful practices directed at consumers and businesses could not be prevented.

If a customer has evidence of actual detriment flowing from the exercise of a term, then this will be useful evidence in the case for relief.  And, having done this, the customer could claim damages and other forms of compensation. 

If a customer alleges that there is a substantial likelihood of detriment, then the customer must do more than suggest that there is a hypothetical possibility of harm.  Instead, the customer will need to show that, if the term is enforced, there is a strong likelihood of there being harm.  Such an action would limit the relief available, generally to a declaration that the term is unfair —and therefore void —and an injunction preventing any attempted use of the term. 

In the context of the provisions, detriment includes both financial and non-financial detriment.  Some have suggested that the only relevant detriment is financial detriment.  And in some cases that is all that will really be relevant.  But in others, where a business abuses the terms of a contract by behaving unreasonably, causing irritation, inconvenience and distress to a customer, then this can — and should —be taken into account. 


There is a view that if something is disclosed then it is all right —no matter how unclearly or obscurely that information is presented.  This reflects the view - put about by some - that all standard-form contracts reflect a ‘bargain’ reached by the parties, which is well understood by them and should not be subject to any scrutiny or challenge once a signature is on the page. 

Thirty-six years ago, the then Attorney-General, Senator Murphy, when introducing the Trade Practices Bill into the Senate, noted that the principle of caveat emptor ‘may have been appropriate for village markets’ but it had ceased to be appropriate as a general rule. 

In complex markets, with ever-increasing rates of innovation and change, the notion that a customer is always perfectly informed and able to act in his or her own best interests represents a view which is simply not sustainable, and does not reflect the reality of modern business or contract law. 

Indeed, a lack of transparency may be a strong indicator of the unfairness of the terms in a consumer contract.  And the existence of transparency, on its own account, cannot overcome unfairness.  This is why it is important that this key factor be explicitly included in the legislation.

The contract as a whole

The government recognises that any contract —whether it is in a consumer contract or not —represents a balance of interests and considerations.  And, no term can be considered in isolation.  Indeed, some terms which, at first blush, might seem outrageously unfair, may be entirely reasonable when considered in context.  For this reason, the government has included an express requirement that a court must take into account the contract as a whole when considering a particular term. 

Examples of unfair terms

The provisions include a non-exhaustive, indicative list of examples of terms which may be considered unfair.  This ‘grey’ list will give statutory guidance on those types of terms that are regarded as being of concern.  It does not prohibit the use of those terms.

The government recognises that there may be times where the use of ‘grey listed’ terms is reasonable.  Any consideration of a ‘grey listed’ term is subject to the unfair terms test. 

And, indeed, the consultation paper the government issued on 11 May 2009 acknowledges that businesses may need to do things like assign contracts or vary agreements.  The government’s principal concern in most cases is to ensure that such terms in consumer contracts —where they are necessary —are clear to customers, and that businesses are upfront about them.

Prohibited terms

In keeping with the Victorian provisions, the unfair contract terms law will permit the prohibition of types of terms of a consumer contract that is a standard-form contract.  A prohibited term is a term of a kind prescribed by the regulations. 

The government has consulted on the question of whether specific terms should be prohibited.  The Government has also canvassed views on specific types of terms that could be prohibited.  While there are terms with few justifications for their use, the government does not propose to prohibit any terms at this time.  We will keep this issue under review, together with the states and territories, in the light of the implementation and enforcement of the provisions. 

Any future prohibition of terms prescribed in regulations is subject to the government’s best practice regulation requirements and the voting process for amending the Australian Consumer Law, which will require the agreement of four other jurisdictions, including three states. 

Meaning of a standard form contract

The provisions apply to consumer contracts in a standard form.  While the Bill does not define a ‘standard-form contract’ it does set out a range of considerations that are to be taken into account when assessing whether a contract is, or is not, in a standard form.  This will include considerations such as the way in which the contract was prepared and whether there was any opportunity to negotiate its terms, among others.  And, the government has included in the Bill the power to prescribe additional factors, to take account of evolving business practices.  In taking this approach, the government was concerned that using a hard and fast definition would only create opportunities for avoidance through the use of sham negotiations and options.

Terms excluded from the provisions

The provisions will exclude certain terms and certain contracts from their operation.  This has been done for a range of reasons, but the key consideration is that there must be justification for the exception which goes beyond sectoral concerns to avoid the operation of generic regulation.

The provisions will not permit certain types of terms to be challenged under the ‘unfair terms’ test. These are terms which:

  • concern the main subject matter of a consumer contract; or
  • set the ‘upfront price’ payable under the contract; or
  • is a term required, or expressly permitted, by a law of the Commonwealth or a state or territory.

The exclusion of terms which ‘concern the main subject matter of a consumer contract’ is intended to exclude the basis for the existence of the contract.  A customer has decided to purchase the goods, services or land, which are the subject of the contract, and they should not be permitted to challenge this on the basis that they later decided this was not a good idea.

The exclusion of ‘upfront price’ is intended to exclude from consideration the basic price paid for the goods, services or land supplied under the contract. This exclusion is based on the premise that it would not be desirable to permit a consumer to challenge the basic price paid for the goods, services or land at a later time, when this is an issue about which the consumer has a choice.  If the price is too high, the consumer can decide not to enter into the contract.

In a credit contract ‘consideration’ is the interest payable provided it is disclosed at or before the time the contract is made.  If the standard-form contract is a contract under which credit is provided, the upfront price will include the total amount of principal that is owed under the credit contract.

Upfront price will not include any other consideration —that is, further consideration —which is contingent on the occurrence or non-occurrence of a particular event.  Terms that require further payments, which are levied as a consequence of something happening or not happening at some point in the duration of the contract, are covered by the unfair contract terms provisions.  Such payments are additional to the upfront price, and are not necessary for the provision of the basic supply, sale or grant under the contract. 

In clarifying this issue on the face of the legislation, the government has taken account of the debate in the United Kingdom, where there has been litigation on the question of whether contingent fees are part of the upfront price.  We believe that the provision, as drafted, makes it clear that such contingent fees and charges are subject to the provisions.

The exclusion of terms ‘required, or expressly permitted, by a law of the Commonwealth or a state or territory’ is intended to ensure that a court is not required to determine the fairness of terms which are required to be included in consumer contracts as a matter of public policy. There are many examples of mandated consumer contracts or terms that are required to be used in order to ensure the validity of specific transactions.

Contracts excluded from the provisions

The provisions will also exclude shipping contracts and contracts that are constitutions of companies, managed investment schemes and other kinds of bodies from their operation. The government considers these exclusions are necessary as these types of contracts can be entered by natural persons for the supply of things of a personal, domestic or household nature. 

The unfair contract terms provisions will not apply to contracts which are shipping contracts.  Shipping contracts include contracts of marine salvage or towage; a charter party of a ship; or a contract for the carriage of goods by ship.  These contracts are already subject to a comprehensive legal framework (nationally and internationally) that deals with contractual terms in a maritime law context. 

The unfair contract terms provisions will also not apply to standard-form contracts which are constitutions of companies, managed investment schemes or other kinds of bodies.  A constitution is given the meaning it has under section 9 of the Corporations Act 2001.  These contracts are carved out because companies, managed investment schemes - which include many superannuation and other investment trusts - and other kinds of bodies have a choice regarding the rules that govern their internal management. 

Section 15 of the Insurance Contracts Act 1984 has the effect that these provisions will not apply to insurance contracts as regulated by the comprehensive regulatory scheme set out in that Act.  

Remedies in relation to the unfair contract terms provisions

From the commencement of the unfair contract terms provisions, existing Trade Practices Act and ASIC Act remedies and the new enforcement powers, remedies and penalties will apply in relation to prohibited terms and, in some respects, unfair terms that are the subject of a declaration. 

A claimant who is party to the contract is able to seek all of the remedies available to the Federal Court under the Federal Court of Australia Act 1976.  These include any remedies to which they would be entitled under a legal or equitable claim.  However, as the ACCC and ASIC will not be a party to a contract, the Bill would permit both regulators to seek a declaration from a court that a term of a standard-form contract is unfair, or is a prohibited term. 

If a party then seeks to apply or rely on, or purports to apply or rely on, a term which is the subject of a declaration then the regulator may seek all of the remedies available in respect of a contravention of the Trade Practices Act and ASIC Act. 

In relation to prohibited terms, a party who includes, applies or relies on, or purports to include, apply or rely on a prohibited term is taken to have engaged in conduct that contravenes the Australian Consumer Law, and will be subject to the existing enforcement and remedies provisions in the Trade Practices Act and ASIC Act, along with the new civil pecuniary penalties, enforcement powers and options for consumer redress provisions that I will outline in greater detail shortly.


The unfair contract terms provisions will apply to all consumer contracts which are covered by its provisions and which are made after its commencement.  They will also apply to all contracts renewed or varied after that date, but only to the extent that the contract is renewed or varied, and in respect of conduct occurring after the date of renewal or variation.


The government has previously said that there is no reason to hold up these reforms and that they could commence on 1 January 2010.  This date is in line with the intended commencement of the new national consumer credit reforms.  This is achievable.  However, I am mindful of the need for businesses to ensure that they comply with the legislation and that they may need more time.  With this in mind, there is provision in the Bill for a later commencement, if needed.

Future consultation

While the government has consulted on this issue several times, I am aware that there are different views among stakeholders in relation to the unfair contract terms provisions.  With that in mind, the government proposes to refer the Bill to a Committee on its introduction into the Senate to enable a further opportunity for those views to be explored publicly.

National enforcement powers and penalties

The Bill introduces new, enhanced enforcement powers for consumer laws. 

For too long, our national regulators have been hampered by a limited range of powers to tackle harmful and exploitative business practices which breach the Trade Practices Act and the ASIC Act.  And, their state and territory counterparts have had a wider range of proportionate powers to enforce consumer laws effectively for many years. 

Consumers increasingly demand information, advice and help in dealing with the concerns and issues they have with business behaviour.

In 2007-2008, the ACCC received more than 65,000 calls about scams.  And it received more than 24,000 inquiries about misleading and deceptive conduct and thousands more complaints about other consumer law issues.  Each of the state and territory offices of fair trading also receives thousands of complaints every year.  Indeed, Victorian consumers made 545,000 calls to their Consumer Helpline last year. 

This Bill will ensure that our national regulators - the ACCC and ASIC - have a broader range of more effective and proportionate enforcement options to protect and help consumers.

The ACCC and ASIC will have new options for enforcement, including civil pecuniary penalties and disqualification orders.  They will have the ability to issue infringement notices, substantiation notices and public warning notices.  They will also be able to seek redress - such as refunds - for consumers not party to enforcement proceedings. 

These new powers, taken together with the existing civil remedies and criminal sanctions, will ensure that the ACCC and ASIC are fully equipped to enforce the law.  And, these powers will be part of the Australian Consumer Law - which will introduce a suite of consistent national consumer law enforcement powers for the first time.

Civil pecuniary penalties

Civil pecuniary penalties are not currently available to deal with breaches of the consumer protection provisions of the Trade Practices Act and the ASIC Act.  This reform will allow actions seeking pecuniary penalties at the civil standard where appropriate without having to pursue criminal sanctions that are more costly and very serious for those accused of a breach. 

Civil pecuniary penalties represent an important penalty to punish misconduct in breach of the consumer protection laws and allow proportionate action to be taken in appropriate cases.  Similar powers have existed for many years in relation to breaches of the restrictive trade practices provisions of the Trade Practices Act. 

Civil pecuniary penalties will be available for 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.  No-one will be exposed to a civil pecuniary penalty of a size greater than those available under the existing criminal regime.

Civil pecuniary penalties will not be available for breaches of section 52 - which concerns misleading and deceptive conduct - as it aims to establish a norm of conduct in the market, rather than establish an offence. 

Disqualification orders

Disqualification orders are currently not available in relation to breaches of the consumer protection provisions of the Trade Practices Act and the ASIC Act, but are available in relation to breaches of the restrictive trade practices provisions of the Trade Practices Act and the Corporations Act 2001. 

The ACCC and ASIC will have the power to seek a disqualification order from the court to ban people who disregard the consumer protection laws from being a director of a company, where the circumstances warrant it. 

Disqualification orders can also deal with the problem of ‘phoenix companies’ set up by unscrupulous operators seeking to hide behind the corporate veil to harm and exploit others; for example, through shonky investment schemes and other scams.   

Disqualification orders will apply - in respect of consumer protection - to the civil pecuniary penalty provisions, except in those relating to substantiation notices, and the criminal provisions of the Trade Practices Act and the ASIC Act.

Substantiation notices

A key gap in the powers of the ACCC and ASIC is the lack of an ability to quickly and easily require information to substantiate claims made in representations by businesses. 

These notices will serve as a preliminary investigative tool.  They will provide the ACCC and ASIC with an effective means of seeking information to assist in determining whether a contravention of the consumer law has occurred, particularly in relation to potentially misleading and deceptive conduct, false or misleading representations or ‘bait’ advertising. 

The Bill will empower the ACCC and ASIC to issue a substantiation notice which requires a person to respond within 21 days to a request to furnish information, or produce documents which may be capable of substantiating or supporting claims or representations made by that person, or their ability to supply, in relation to the supply or possible supply of goods, services, land or financial services. 

While a person must respond to a notice, they do not have to prove the claim, just provide information capable of supporting or substantiating the claims or representations they have made.

Redress for non-parties

The redress for non-parties provisions of the Bill will allow the ACCC and ASIC to act more effectively where, for instance, thousands of consumers suffer small losses on which each of them might not take action individually because of cost and inconvenience.  Businesses should not profit from consumer detriment, just because the amount is small or the harm is spread widely.

These provisions address a concern about the limitations of the current scope of the powers of the ACCC, which was brought to a head in the 2002 decision of the Full Federal Court in Medibank Private and Cassidy, where the Commission’s powers were found not to be sufficient to entitle it to seek relief on behalf of persons who were not parties to the enforcement action.  This reform will remedy that deficiency.

This reform will allow a court to order the payment of refunds and similar forms of redress without the need for all consumers affected to be named as parties to the regulator’s court proceedings. 

This is not a general power to award damages, but a power to order redress where that loss or damage is clearly identifiable and there is no need to adjudicate the merits of each particular case.  It could be used to order redress of a standard form, such as the making of an apology, the exchange of goods or the payment of a refund. 

Redress for non-parties will be able to be sought where a person engages in conduct that contravenes the unconscionable conduct or consumer protection provisions in the Trade Practices Act or the ASIC Act, or where a court has made a declaration that a term of a consumer contract is an unfair term or a prohibited term.

Infringement notices

New powers to issue infringement notices will allow the ACCC and ASIC to deal with alleged breaches of the law without the need for costly legal proceedings.  Infringement notices will provide our regulators with the ability to seek small penalties for minor breaches of the law, which a person may pay and avoid legal proceedings.

A person issued with a notice is not obliged to pay the amount specified.  But if the person does pay, the regulator cannot take further action for the alleged breach.  If the person does not pay the notice cannot be enforced. However, the regulator may pursue the alleged breach in a court. 

This will provide cost savings, both to our regulators in pursuing breaches of the law and for those businesses wishing to avoid costly court proceedings in relation to minor breaches of the law.  Infringement notices will be able to be issued for alleged breaches of provisions that are subject to civil pecuniary penalties, except those which include a mental element such as accepting payment without intent to supply. 

Public warning notices

The last power provided for in this Bill relates to public warning notices.  Some call this type of power ‘naming and shaming’.  It is commonly used by state and territory offices of fair trading, particularly to deal with ‘fly by night’ operators and ‘phoenix companies’.

Public warning notices are an effective tool to warn the public about actual or likely harm that may result from suspected breaches of the consumer laws, and help prevent consumer detriment. 

The power contained in this Bill includes a number of important safeguards around the use of this power - designed to provide reassurance that it will be used in an appropriate and proportionate manner.  And, I note that the ACCC and ASIC will not have immunity from defamation actions in relation to the exercise of this power.

Public warning notices will only be able to be issued where the regulator has reasonable grounds to suspect a breach of the Trade Practices Act or the ASIC Act, believes that consumers have suffered or are likely to suffer detriment and is satisfied that it is in the public interest to issue the notice. 

These notices will be a powerful tool in combating fast-talking rogues and other operators who often disappear before the law can catch up with them.


This Bill represents the first part of a generational change in Australia’s consumer laws.  It introduces reforms designed to make Australia’s markets work better, to improve protection for all consumers and to strip away layers of legislative and regulatory complexity from our laws, saving business time and money and contributing to the delivery of a seamless national economy. 

In presenting this Bill, 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.

The Bill will, as I have described in some detail, implement a national unfair contract terms law for Australia and it will implement much-needed improvements to the enforcement of consumer law at the national level, through the introduction of new powers for the ACCC and ASIC to take more effective and proportionate action.

I have said that this is the first part of this reform process.  Early next year, the government will introduce a further Bill which will bring in changes to fully implement an Australian Consumer Law.  Then we will, after further cooperative effort by Australia’s governments, achieve our goal of a single consumer law for Australia. 

Then, for the first time, all Australian consumers will be able to count on the same protection: wherever they are, whatever they buy, wherever they live. 

I commend the Bill.

Debate (on motion by Senator Wong) adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.