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Wednesday, 15 October 2008
Page: 9284

Ms PARKE (10:27 AM) —I support the Trade Practices Amendment (Clarity in Pricing) Bill 2008 because it is a matter of common sense that to the greatest extent possible Australian consumers ought to be able to rely on an advertised price as representing the full price of any promoted good or service. One could go further and say that, for a market economy to work efficiently, consumers must be in a position to accurately assess the comparative prices of goods and services, so that the demand for goods and services is properly determined by relevant supply, cost and margin factors, as represented in the accurately advertised price, rather than by some kind of pricing obscurity.

This bill amends the Trade Practices Act to deal with an interpretation by the Federal Court of section 53C and its requirements as far as price disclosure is concerned. The need for the amendment contained in this bill has been spoken to eloquently by the number of complaints to the Australian Competition and Consumer Commission. These complaints have focused on the practice by some businesses of advertising prices that are in fact significantly less than the total price of a good or service—by excluding certain taxes and fees. The previous government examined the component pricing issue in two rounds of public consultation and outlined draft legislation to deal with the problem in 2006. However, nothing came of it—there was no action.

The effect of this proposed amendment is quite clear. Where a price for a good or service is provided or represented to consumers, it must be presented as the total price of the good or service to the extent that it is possible to do so. While component pricing is still available as an option to businesses, where a component price is presented, the total price must also be clearly displayed, and the total price must be presented at least as prominently as the most prominent of any of the displayed component prices.

As an amendment that governs pricing conduct, this bill has no significant financial impact on Commonwealth expenditure or revenue. Its impact will be on individual Australian consumers, who will be able to make financial decisions with greater knowledge and confidence, and on the Australian market as a whole, which will become more properly responsive to true price signals.

As with any regulatory change, this bill takes into account the realistic concerns of Australian businesspeople. The new price disclosure requirements will not apply to the provision of financial services, which is covered under section 12DD of the Australian Securities and Investments Commission Act 2001 and will remain so covered out of recognition of the fact that total price disclosure cannot feasibly or accurately be made in respect of many financial services. Similarly, postage and handling costs have been excluded as a component that must be disclosed in the total price, for the reason that this would place an unreasonable compliance burden on many businesses and because postage and handling are generally understood by consumers as constituting a separate service with an additional and separate cost.

When one considers the benefit of total price disclosure, and then takes into account the regulatory nuances I have already mentioned, it cannot be argued that this amendment does anything other than require Australian businesses to operate with the kind of price clarity that the man and woman in the street, and the vast majority of Australian businesses, would already regard as right and proper conduct. In discussing this bill over the last few days with friends and with constituents, it has been interesting to note how many people assume that the requirement for total price disclosure already exists or is implicit in the Trade Practices Act.

It is also relevant, in my view, to note that the pricing clarity required by this amendment is no different from or more onerous than the kind of precision we require in numerous areas of Australian social and economic life. We require extensive financial information disclosure from publicly listed companies; we require accurate GST input and output information from small- and medium-sized Australian businesses; and of course we require Centrelink clients to report their income, in detail, fortnightly. If you are asked to provide your gross income for a family tax benefit estimate, you are certainly not entitled to put the net figure and then hide an asterisk somewhere on the bottom of the page. Indeed, there would be very serious penalties for doing so. Yet you only have to go online or pick up the travel section of the newspaper to see a very generous pepper-grinding of asterisks around, or at least in the vicinity of, the advertised prices. This Tuesday’s edition of the West Australian contained ads for car rentals, health insurance and travel products—all of which failed to display the total price for obtaining the proffered good or service.

I would like to briefly address some of the comments that have been made in relation to this bill. I note that in the opinion of the Business Council of Australia there is an ‘absence of a clearly articulated problem at which the proposed amendments are aimed’. I think the problem can be clearly articulated. The problem is that some businesses, whether intentionally or otherwise, are misleading Australian consumers by advertising prices that are significantly lower than the total price which the consumer will, in reality, have to pay. The Business Council has also suggested that there would be ‘practical problems associated with businesses attempting to comply with these provisions’. However, when you consider the way the amendment is calibrated, with sensible exemptions and limitations of coverage, and when you consider the number of businesses that already comply—often in the same industry as those who do not—it is hard to see the Business Council’s position as being anything other than a reflex antiregulatory stance.

This government is well aware that a market is not some naturally-occurring phenomenon. As demonstrated in recent times by the global economic crisis, markets are created and shaped by humans. They work more or less fairly, more or less efficiently and more or less stably as a result in large part of the quality of the regulatory framework that governs them. This government is not afraid of taking action to make the regulatory framework better. While in many cases this may well involve reducing regulation, in this case it requires a small but significant change to deliver fair pricing transparency for Australian consumers.

This bill has received strong support from CHOICE, one of Australia’s most significant consumer advocate groups. Indeed, CHOICE campaigned for this change for years before the former coalition government finally released its draft legislation in 2006. But then, having reached the draft stage, the previous government went no further. In these circumstances, for the shadow minister for health and ageing, the former shadow minister for finance, competition policy and deregulation, to claim that the Rudd Labor government has merely copied coalition policy is patently ridiculous. How can legislative action be regarded as copying inaction?

The Consumer Action Law Centre has also recognised that the proposed amendment bill is well written and practical. Its submission in response to the draft legislation highlights the practical nature of the changes. Consumer Action supports amendments to the act that increase consumers’ access to easily understood information about goods and services. Requiring a single price for goods and services will provide important price information to consumers.

We support the general thrust of the amendments and believe that generally the draft legislation is well prepared and the draft explanatory memorandum is clear and useful. This amendment bill is tailored carefully so as to create a fairer market environment for consumers and a fairer competitive environment for the vast majority of honest businesses. Importantly, it will achieve these things without creating an unfair compliance burden.

I conclude by returning to my first point: that the clarity or transparency in pricing that is required by the amendment to the Trade Practices Act contained in this bill is a matter of common sense. All things being equal, goods and services should be advertised at the total price required to obtain them. Many Australians would assume that this is in fact already the case. I am sure that this is partly why so many complain to the ACCC when they find that it is not so. Most Australian businesses operate on a total price disclosure basis and they will be rightly supported by this bill, which will require their competitors, some of whom have behaved unscrupulously, to meet the same fair and honest standard of pricing clarity.