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Tuesday, 14 October 2008
Page: 9099


Mr NEUMANN (7:23 PM) —I rise to speak in support of the Trade Practices Amendment (Clarity in Pricing) Bill 2008. The Trade Practices Act was a groundbreaking piece of legislation brought in by the Whitlam Labor government in 1974. It was a great initiative, and the late Lionel Murphy should be congratulated for that initiative during his time as the Attorney-General. It is fair to say that for decades Australia languished when it came to trade practices legislation, and consumers across Australia were subject, unfortunately, to unfair prices, abuses of market power and the violation of human rights really without much protection at all. They could go to court and argue the case, but a lot of consumers are not in a position to finance expensive litigation in the Magistrates, district or Supreme courts, let alone in the Federal Court. So having a watchdog like the ACCC, the Australian Competition and Consumer Commission, was a great initiative, and I know that body has been supported by both sides of the House. The stated aim of the Trade Practices Act is:

… to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.

This is what the clarity in pricing bill is all about. It will ensure that Australian consumers get a fair go.

The Trade Practices Act has some tremendous parts to it which the ACCC administers and enforces: the anticompetitive behaviour provisions in part IVA, the consumer protection provisions in part V, and other parts that deal with unconscionable conduct in relation to commercial transactions and consumer dealings. It really is our protection code for consumers. Without it, just imagine where we would be. It is a tragedy that it took so long for us to have the trade practices legislation in the history of this country. The mid-seventies was simply too late. It took a Labor government to do it after 23 years of conservative rule from 1949 to 1972.

This particular piece of legislation seeks to amend the Trade Practices Act 1974. It relates to the use of component pricing in representations by businesses to consumers. It is not business to business; it is business to consumers, so it is all about the protection of consumers. It deals with part V, section 53A, which is the provision in relation to the cash price to be stated in certain circumstances, and section 75AF, which is about the liability for defective goods or loss relating to other goods. The measures contained in this particular bill will clarify that when a business makes a representation to a consumer about the price of a good, or a service for that matter, to the extent that it is possible to do so it must disclose as a single figure the total price of that good or service. I think that is what consumers expect, that when they go into the supermarket or they buy a car or they purchase an airline ticket and the price is there, that is what they pay. I do not think they expect to be ripped off by hidden taxes, levies or charges. I think they want honesty, transparency and openness when it comes to business transactions. When they purchase goods and services, that is what they want. We have seen that in a lot of the professions, where there are contracts in accountancy, in law and in other areas where consumers are expected to be given information about that. We have seen it in the purchase of real estate, certainly in Queensland. There are provisions in relation to cooling-off periods. So everything about protecting the consumer is a good thing in our society because consumers compared to businesses are in an unequal power situation.

This legislation will put an end to the practice of consumers being ripped off by hidden fees and charges. It delivers an important reform to empower consumers to make the best choices that they can undertake with the limited cash that they have. It provides clarity and certainty to consumers across our country and I warmly welcome it, as I am sure my constituents in Blair do also. It is important because we need to know the prices of the goods and services that we are purchasing. It is sad that, notwithstanding what the member for Cowper said, the previous government really did not take this issue and run it to conclusion. In other words, it has been left to us to introduce this piece of legislation when they knew about it and the problems associated with clarity in pricing for nearly their 12 years of sitting on the government benches. The former government failed to act on this important issue to strengthen the consumer’s right to know the total price of a good or service. The former government talked about reform, they consulted, they discussed it, they cogitated, they meditated—but they did not act. They did almost nothing. We had periods of inactivity, idleness and in fact ignorance on the issue.

Consumers across this country will welcome the legislation because consumer protection is important for all Australians. I know when I conduct my regular mobile offices around my electorate, in the rural areas as well as in Ipswich, that consumers are frustrated. They are frustrated when a product that they buy is not the price asked when they go to the checkout. Recently my 17-year-old daughter Jackie had that experience. I will not name the business in my area, but she had that experience as a young woman 17 years of age. My wife and I have trained up both our daughters—the elder is 19—to have the kind of certainty and frankness and candour to purchase items. We have not trained them to be reticent about these issues.

My daughter was recently confronted by circumstances where there was an advertised price for a certain product that she was purchasing but when she went to the checkout there were all these hidden charges. I saw the distress that my 17-year-old daughter felt when she had to rely on money from my own mother, her grandmother, to help her to pay for that purchase. Clearly, when you looked at the advertisement, it was wrong. It was misleading and mischievous. We just cannot have this because we cannot have our young people and other people in these circumstances facing these sorts of problems. If a business advertises a price to a consumer, it should display a single figure if at all possible. The total price of the product, to the extent that it is quantifiable, must be there on the counter at the store. Representations must be accurate, and this measure will ensure that consumers throughout Australia can be certain of the total price they will have to pay for the goods and services before they enter a transaction. As the Minister for Competition Policy and Consumer Affairs and Assistant Treasurer outlined in his second reading speech, this bill will ensure that the total price a consumer has to pay will be ‘prominently stated, not just lost somewhere in a footnote’.

The bill clarifies the practice of component pricing, which is currently regulated by section 53C of the Trade Practices Act. Component pricing is the practice of advertising prices as the sum of multiple component parts. In other words, $A plus $B equals a certain amount. If a business uses component pricing and does not provide a clear total, consumers are less able to readily compare the goods and services on offer. In fact, they are given a false impression—they are misled to believe that goods and services are cheaper than they actually are. Unfortunately, it is the case that some businesses deliberately use component pricing to mislead consumers about the real cost of a product or service. What do they do it for? They do it to get the consumer in. They do it to gain an unfair competitive advantage over other businesses that are honest, frank and transparent in making full disclosure to consumers. Because of these unscrupulous practices, it is crucial that we regulate component pricing. This bill will ensure that there is a level playing field for businesses advertising their goods and services, and that businesses which are doing the right thing and complying with component pricing laws are not disadvantaged. The bill seeks to amend the Trade Practices Act to clarify the operation of the existing component pricing provisions.

Sometimes courts do strange things. I had a look at the two decisions that were made by the Federal Court in relation to this particular matter. It is quite extraordinary what the court found in the two decisions which were referred to by the member for Cowper. In 2002 the Federal Court found that the existing section 53C did not require the disclosure of a single-figure price, provided that a total price could be obtained without the consumer needing to perform a ‘complex calculation’. What an extraordinary decision! I must mention that the court’s finding was inconsistent with previous legal advice obtained by the then coalition government, as well as the ACCC’s own approach to enforcing the legislation. For this reason alone I welcome the bill. As the Assistant Treasurer stated, it will give effect to the original intention of section 53C.

While the focus of this bill is about protecting consumers from being ripped off, it also includes some practical provisions to assist business. First, business will only be required to state the minimum quantifiable consideration for supply. Basically what this means is that, if the business cannot genuinely determine what, say, the taxes, levies or charges might be for some other component of the price, the business will be able to make a price representation which would not require them to state the total price. Of course, though, they would still have to make it clear the type of additional charges that might be incurred. Secondly, the bill exempts businesses from stating charges related to sending goods from one supplier to the customer. That means that genuine postage and handling charges need not be included in the single-figure price. Thirdly, financial services are not covered by the bill. Fourthly, the provisions in this bill will not apply to representations which are in between bodies corporate.

The Assistant Treasurer in his press release on 25 September 2008 said that this legislation will ‘tackle the problem of hidden fees and charges for consumer products’. He went on to state quite clearly:

It is not appropriate for a business to represent that a product costs a certain price and then use fine print disclaimers to reveal additional mandatory taxes, fees or other charges.

The exposure draft of the bill was released for public consultation in March 2008. There were a range of comments received and made by a group of businesses and consumer advocates—stakeholders who were interested in the legislation represented to the government their respective positions. The government was clearly of the view that the bill should not impose unnecessary compliance burdens on business, and that is why the four provisions I outlined are there in the bill.

It is important for us to say, as the minister said in his press release, that gone are the days when we front up to a business and just wonder what the fees and charges might be. We expect in our society that we should pay the price that is offered. We want transparency and openness in our consumer transactions.

It is interesting to note that in 2007-08, the ACCC received about 430 complaints relating to the existing section 53C of the Trade Practices Act. It is notable also that Consumer Affairs Victoria has received about 250 complaints in this calendar year. Those complaints ranged across a variety of industries. Any example of this is unacceptable. Even though, as I said, the previous government undertook a number of rounds of public consultations, there was no legislation introduced to this parliament. It is the Rudd Labor government which is ensuring that this legislation, which will protect consumers, is before the chamber.

I warmly welcome this bill. It will increase transparency in pricing, empower consumers and give them the best chance possible to purchase goods and services on a competitive basis. That is good for the electorate of Blair and it is good for electorates across the country. It will prevent consumer disadvantage and we will not unnecessarily burden business with compliance. It will ensure in this very difficult time, with a global financial crisis upon us, that our consumers will not be left behind and will have access to the kinds of rights that a decent, fair and just Australia should have.

We will be empowering those who are less fortunate, those who have little financial power, by giving them the chance to equalise that power relationship. We will bring our legislation into the 21st century. This piece of legislation, though minor, will have a huge impact on the day-to-day lives of Australians. I think that in years to come we will look back on this piece of legislation and say, ‘This was a small change, but it was a big change to the way we do business in this country and it was a big help to consumers.’ I warmly commend the bill to the House.