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Wednesday, 15 October 2008
Page: 9279

Mr RIPOLL (10:06 AM) —It is a pleasure to be speaking on the Trade Practices Amendment (Clarity in Pricing) Bill 2008 because I think it is a core piece of legislative work for any government to undertake. I have noted, as will other speakers, that this bill is long overdue. In my eyes, it is something that could have been done many years ago but was not actioned. It is a great pity that consumers and ordinary people have had to wait so long to have this type of legislation put into place. I congratulate the Minister for Competition Policy and Consumer Affairs and Assistant Treasurer and the people who have worked on this bill. I think it will go a long way to improving consumers’ ability to make properly informed decisions about the price of goods that they purchase.

For a long time we have seen a range of business operators using language, advertising, marketing techniques and pricing with the all-too-common asterisk beside the price to lead people to believe that that is the price that they will be paying when we all know that it will actually be much more. This is done in a variety of ways, from products which just have a simple advertised price with an asterisk which says, ‘Other fees and charges will be attached’, to the much more sophisticated and complex types of arrangements, where some unscrupulous operators will deliberately mislead consumers into believing that a particular price, the advertised unit price, is what they will pay when in fact it is not even close to that price.

Often those techniques are used to draw people in—just to get consumers to come through the door. Once they are through the door they have perhaps made that emotional commitment to buy a product they were interested in and figured it around a price that was advertised. Once they are in the door and have a slick salesman on their heels, they are convinced to purchase something that is either much more expensive or, by the time they have committed to buying that product with all the additional fees, charges and other elements that go with the price, to in effect pay substantially more. Something needs to be done about that, and this bill does that. Consumers do need to be protected. They need to be protected from unscrupulous businesses and unscrupulous practices, so I very much welcome this bill.

The bill does a number of things. Sometimes an advertisement carries a price—let us say it is the large-print price—which is not the full price, so there are other fees and charges. That might be appropriate, because there are circumstances where the final price cannot be determined properly until a consumer comes in and makes all their final decisions on what it is that they are purchasing. Buying a car is a good example of that. There is a base price and you know that there will be fees and charges, delivery costs and a range of things on top of that, so the final cost may vary. Consumers need to be properly informed about the unit price, and then also properly informed about each of the other fees and charges and delivery costs that are associated, to make sure that they are entering into a decision to buy a product based on proper information that they have at hand. What our legislation does, for example, is make clear that if a business advertises a large-print price with an asterisk indicating that there are other fees and charges, it must also carry the final price in the same size print and the same font. So there will be an equal balance between the advertised price—let us say the sale, gimmicky price—and the real price that consumers have to pay.

I am sure that I am speaking not only for my constituents but for constituents right across Australia and every consumer when I say that there is nothing more frustrating and infuriating than when you turn up to a particular business outlet with a newspaper clipping in your hand, quite excited about some bargain that you are going to get based on this wonderful, unbelievable advertised price. I am sure we have all had this experience. You are thinking: ‘This is almost too good to be true. This is what I want to buy; it’s exactly what I’m after,’ only to be massively disappointed when you are told what the real price will be and that you cannot get any colour you want, that you can really only get the colour white, for example—just plain white—and that if you want it in any other colour it is going to cost you an extra thousand dollars, and so forth.

There are so many examples and circumstances where consumers are let down. That in itself may not be too bad a problem, some might say—that is, you are a little disappointed. The real issue and where consumer protection needs to come in—our role and why we need this legislative change—is when you go through that process, you have made some sort of emotional commitment and then you are convinced to buy it at the higher price. Basically, you have been scammed. That is where we need to come in. That is why the amendments in the Trade Practices Amendment (Clarity in Pricing) Bill need to take place. I know consumers will be exceptionally happy when they see advertisements now. They will have more confidence that the price that they are seeing is actually the real price.

This sort of problem exists in a whole range of areas, not just with the unit prices that we often see advertised. A particular issue that I know would have been raised with many members right across the country is that of mobile phone contracts and other telephony related contracts, where it is very difficult for anybody to comprehend just what it is they are buying and what the real costs will be. There are so many different elements to it that it becomes very complicated, and very confusing. Somebody purchasing what they believe might be a $10 plan or some sort of simple service may end up paying substantially more—sometimes many, many times more than the original price they had intended to pay. I think it is important that we as legislators put in place a range of protections to ensure that consumers have proper access to information and a better understanding of the prices.

This will level out the playing field. I think it will actually be good for business—a real bonus. It will be a real benefit to small enterprises and small business, the backbone of the Australian economy, because it means that they will be on a better playing field. The smaller businesses do not have large marketing and advertising budgets or capacity, so it will put them in a better position against the large, big-business firms and against the unscrupulous players who sometimes take out these large-print advertisements carrying unbelievable prices.

Of course, it is not just about unscrupulous firms and situations where prices are outrageously advertised and are nowhere near the real price; sometimes it is just the smaller things. It can be just as simple as getting a haircut, going to a restaurant or buying a simple product on a daily basis. You ask the price and you are told the price, but by the time you have consumed the good, in whatever manner it will be, there is an additional fee. It has happened to me on a number of occasions. I know it has happened to friends of mine, and constituents have come and complained to me about it.

I think this problem is even worse because the price may not be specifically written down; sometimes it is just verbally told to you or it may be on a menu or something similar. When you go to pay the bill, there are additional charges there that you were not told about, and you really are left with very little option or choice because of the embarrassment factor. I think that some unscrupulous businesses actually trade on the embarrassment factor. It is too late—the bill is there, so you are going to pay it, be embarrassed and argue about it or not check in detail if there are different items that carry additional charges. I am sure there are not many of these businesses around Australia, but there are some where you buy the basic item but to have it brought over to your table, say, costs an extra dollar.

It is important that the message is sent through really strongly that we do not support that type of behaviour, that there needs to be clarity in pricing and that consumers need to understand and be fully informed of what it is that they are purchasing and for how much they are purchasing it. We saw that particularly become an issue when the GST was first introduced. Some business outlets were actually advertising the price pre-GST, or the price without the GST included, and then later were hitting people up for that extra fee. As we all understand, the price is the price and it should be inclusive of fees and charges where they are applicable.

Of course this bill will not apply to a range of areas. As a government we went out and consulted with people. This was not some sort of arbitrary decision-making process. We actually went out to the sector and to the community to ask for input to make sure that what we were doing met the standards and needs of consumers right across the country. Following that extensive consultation, a number of key changes to the previous government’s draft legislation had to be implemented, including things such as removing postage and handling charges from the scope of the changes.

The amendments in the bill do not apply to the Australian Securities and Investment Commission Act 2001, meaning that financial services are exempt. They also apply exclusively to business-to-business transactions. In most cases, the total price will have to be at least as prominent as the most prominent of any components of the price. Also, there is an exception to the ‘at least as prominent’ disclosure requirement for contracts for services where those services are provided for the duration of a contract either periodically or continuously and the contract provides for periodic payments. These are sensible changes and amendments which reflect that you cannot in all cases have a single price which is the final determined price and that there will be some form of negotiation in terms of a final price depending on the service or product and charges for things such as postage, handling and weight. So there are a range of important circumstances which we have accounted for in this legislation.

In the end, what this bill tries to do is very sensible. It is a common-sense and important change which will give consumers a fair go and make sure that people do not get ripped off. We have made sure that the regulatory framework is in place to protect them. I commend the bill to the House.