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Tuesday, 11 February 1986
Page: 51


Senator HAINES(5.00) —I start by saying that I have considerable doubts that this piece of legislation will cause a lawyer-led recovery of the sort that Senator Durack indicated it would, mainly through the section on unconscionable conduct. For what it is worth, I refer him to the United States uniform commercial code, which is similar in intention and does not seem to have caused that problem in any untoward manner over there. Certainly Senator Durack is right in his discussion of the scope of this legislation, but I would challenge his assertion that it is a bad piece of legislation because it is unnecessarily extending regulations. It certainly affects everything from mergers to mandatory recall, but it does so as a consequence of the fact that it has been about nine years since the Trade Practices Act was in any way significantly amended, and that was done as a result of the last major review, or at least the one prior to this Government's Green Paper, which was undertaken by the Swanson Committee in 1976 and produced amendments in 1977, nine years ago.

Since then many things have happened. Apart from deficiencies revealed by the experience gained by the Trade Practices Commission and by judicial decisions, some of which are narrow in the extreme, major changes have taken place in Australian industry, and there is a greater trend towards increased concentration. For those people who are either not aware of this or do not feel particularly uneasy about it, I would direct them, for a start, to the behaviour of the Bell Group towards Broken Hill Proprietary Co. Ltd in recent weeks. As a consequence of these sorts of changes, as a consequence of the fact that it is some nine years since the Swanson Committee's recommendations were taken up, and, I might add, following considerable consultation with relevant business and consumer organisations, the Government's Green Paper on proposals for change was issued, almost exactly two years ago, and this, too, has been discussed at considerable length, to say nothing of depth, within the community.

As a consequence, we have a piece of legislation before us in which there are significant amendments aimed at improving the effectiveness of restrictive trade practice provisions and extending the protection afforded to consumers by the Act. I would point out, too, that consumers are not necessarily just individual people. There is an increasing number of small business operations which would classify themselves as consumers and which have been increasingly concerned over recent years that they are not being sufficiently covered by the Act.

The major proposals that this Bill approaches are those concerned with the misuse of market power, the unconscionable conduct about which Senator Durack was so anxious, product recall, and measures enabling the Trade Practices Commission to seek compensation for named defrauded persons. Generally speaking, and contrary to what Senator Durack has said in part in his speech, I suggest that the amendments represent a realistic and balanced approach to much needed reforms. That is not to say that the Bill has not been without its critics. Indeed, the Law Council of Australia, the Confederation of Australian Industry, the Business Council of Australia, the Australian Petroleum Agents and Distributors Association, the Council of Small Business Organisations of Australia, the Australian Council of Soft Drink Manufacturers, and the Senate's beloved Standing Committee on the Scrutiny of Bills have all raised concerns about various clauses of the Bill. Consumer organisations have also put in their two cents worth.

As I said a moment ago, the main contentious clauses, those which have been commented on by an assortment of organisations, including the Law Council of Australia and some of the organisations that represent big business as distinct from those organisations that represent small business, include the misuse of market power, the unconscionable conduct section, the mandatory product recall clauses, the section relating to mergers and other acquisitions, and the section relating to misleading statements. But there are other less contentious but no less important elements of this piece of legislation that deserve to be looked at. Those include the sections relating to section 4B, which, for example, acknowledge the fact that inflation has occurred over recent years and has eroded the monetary limit of $15,000 currently in section 4B, so that that, under the Bill, has been increased to $40,000. To the best of my knowledge no one is complaining about that fact and, indeed, small business organisations believe that it gives them even greater protection.

In addition to that, a specific protection is provided for truck owner-operators following the recommendation in the national road freight industry inquiry. Whilst the Law Council of Australia, probably with some justification, questions the inclusion of one particular group in this piece of legislation, we believe that, under the conditions that I have mentioned-namely, that it follows the recommendation from the national road freight industry inquiry-it is justified. In addition, we have changes to section 58 relating to a corporation accepting payment without intending or being able to supply goods, and the amendments to sections 64 and 65 relating to fraudulent claims for unsolicited advertising or entries in a directory. Anyone who has read the complaints that have come, particularly from small business, in these areas, as expressed in newspapers in recent months, will realise that this problem seems to be a growing one. This Bill is an attempt, in part, to provide protection. Certainly the legislation is not perfect, but I would suggest that if we sat around in this place waiting for any government to produce a perfect piece of legislation we would be here until doomsday and even less would get done than normally gets done.

The legislation has, however, been significantly improved by the Government already in its acceding to certain amendments suggested by the Law Council of Australia and in discussions over the last few months with the Australian Democrats as well. I believe that it can be further improved, particularly in relation to the protection that it gives to small business. We shall be picking up a number of amendments left over from the suggestions from the Law Council of Australia and the Council of Small Business Organisations of Australia.

I cannot see that there is any real need to send this piece of legislation to a committee, for a number of reasons. First of all, I find it difficult to come up with any Senate standing committee that is, in fact, an appropriate body to which to send a piece of legislation such as this. As I said at the beginning, it covers everything from mergers to mandatory recall, and even the Senate Standing Committee on Constitutional and Legal Affairs would take some time to come to terms with all of that. There certainly are not enough senators left in this place to form a select committee to which to send this legislation. Furthermore, apart from concerns expressed by big business, it is essentially a piece of good consumer legislation under which consumers, whether they are individuals or small businesses, will get more protection than they do currently. In broad terms, I suggest that the Bill does provide significant additional protection for individual consumers and small business. Given the rhetoric that we are accustomed to hearing from the Opposition parties about their concern for small business, I would have thought that one of their primary concerns would be that this Bill does in fact provide additional protection for what they seem to regard, if one listens to the rhetoric, as part of their natural constituency.

I have already covered things like the section 4b amendment. The section 46 amendments strengthen the hand of the Trade Practices Commission is dealing with complaints by small businesses against powerful firms. That was certainly a concern that the small business people expressed to us. They have felt increasingly out in the cold when it has come to support from the Government under this legislation. The amendment to section 53 to prohibit misleading representations about the availability of spare parts or repair facilities will assist farmers, for example. Again, I would have thought that that was a concern that the Opposition shared with us. I have already mentioned concern about sections 65 and 64 when it comes to fraudulent claims for payment. The Bill, however, is not, as Senator Durack seemed to imply, anti-business in the sense that it imposes excessive regulations or requirements on big business. Part IV is aimed at freeing up markets and the amendments do not depart from that policy. The section 46 amendments will continue to protect businesses entering new markets or expanding existing markets from firms that abuse their market power. In short, the amended Trade Practices Act would prohibit unscrupulous conduct and encourage aggressive and fair but competitive conduct from reputable businesses.

A letter that I have from the Council of Small Business Organisations of Australia has almost nothing but praise for the legislation. Where it differs with the Bill is a complaint that the recommendations for amendment to section 49 made in the Green Paper have not been picked up by the Government. I have no real idea why the Government has not except that it may be that it agrees with the Law Council of Australia in its suggestion that the amendments currently being made to section 46 offer small business the same sort of protection that groups like COSBOA feel would come from strengthening section 49. Notwithstanding that fact, however, we believe that it is appropriate to continue along the lines that the small business organisations would like to see and as a consequence we will be moving an amendment to section 49 along the lines of that suggested and recommended in the Green Paper.


Senator Chipp —With Liberal support.


Senator HAINES —Senator Chipp interjects that we would expect Liberal support. I certainly hope that we get it. I am not sure that I am going to hold my breath waiting, given the remarks that Senator Durack made earlier which seemed to indicate that the Liberals are yet again trading off the interests of small business for that of big business in this country. The amendment suggested in the Green Paper to section 49 would allow the average small business some change of taking action against those businesses which use unfair and commercially unjustifiable price discrimination to erode the small business share of the market. For example, larger discounts are given to a chain of grocers or a multi-branch business with large buying power than are given to small organisations. As I said, the Law Council believes that this sort of protection is adequately covered in the proposed amendments to section 46 but, certainly, beleaguered small business people, such as those represented by COSBOA, would feel more comfortable and secure with the extra protection afforded by this change to section 49, and we will be proceeding with that. The letter that I referred to a moment ago from the Council of Small Business Organisations of Australia was in fact addressed to Senator Chipp and it reads as follows:

When you addressed us earlier this year you assured us that your Party was in favour of providing adequate protection for small business, from unfair competition, through amendment of the Trade Practices Act.

As you know, the Government has proposed a range of amendments most of which we agree with, and we concede that the amendment of Section 46 may be of some assistance to small business in some special circumstances.

However, the fundamental need for protection of small business is a strengthening of Section 49, Price Discrimination, as this is an area which on prima facie evidence is widely exploited by large interests to vary the market situation at the expense of small firms, which are in practice unable to make use of Section 49, despite its underlying intent.


Senator Chipp —That is why the Liberal Party won't support us.


Senator HAINES —The Liberal Party, I am sure, has, as indeed you did, Senator Chipp, assured people like COSBOA that it is interested in providing adequate protection for small business. We will see whether it intends to follow that statement with any sort of action. It is important to these people that they feel that they are covered, particularly since, as they point out in the letter, there has been only one successful case under section 49 in the history of the Act and that had some special features attaching to it. The fact that there have been no others indicates just how unusable the present legislation is, at least as far as COSBOA is concerned.

We will be looking too at a number of issues that were raised by the Standing Committee for the Scrutiny of Bills, in particular clause 20 relating to interpretation. This clause relates to a corporation making representations when it does not have reasonable grounds for doing so. It is the intention of this amendment to define representations as misleading if the grounds for making them were not reasonable. The Law Council of Australia and the Scrutiny of Bills Committee have both expressed concerns in this area. The particular concern raised here is about the reversal of the onus of proof in sub-clause (2). After raising the matter with the Attorney-General (Mr Lionel Bowen) and receiving his response, the Scrutiny of Bills Committee had this to say:

The Committee thanks the Attorney-General for his response and in particular for the clear statement of Commonwealth policy on the reversal of the persuasive onus of proof. However, while the Committee is prepared to concede that in some instances the reversal of the persuasive onus of proof may be justified by the particular circumstances of the case-

the Committee refers back to comments the Committee made in its sixteenth report-

the Committee does not believe that this is such a case. In most criminal proceedings the prosecution is required to prove the state of mind of the accused and it is difficult to see why belief as to the correctness of promises or predictions should be in any different position. The Committee suggests that in this case a reasonable balance would be struck by placing on the defendant an evidential burden, since the basis upon which it makes its predictions is peculiarly within its knowledge, but then requiring the prosecution to rebut the evidence so advanced.

Having said that, the Committee went on to say that it:

. . . continues to draw the clause to the attention of the Senate under principle 1 (a) (i) in that by imposing the persuasive onus of proof on the defendant it may be considered to trespass unduly on personal rights and liberties.

We will be picking up that particular comment from the Scrutiny of Bills Committee, echoed by the Law Council of Australia, and we will move an amendment in line with what the Scrutiny of Bills Committee has suggested.

There has been a suggestion that some of the narrower interpretations of some sections of the Trade Practices Act could be avoided if the Government were a little more consistent in its wording. Concerning clause 20 of the Bill, in sub-clause (3) the words `shall not be taken' should in fact read `shall be deemed not' and so on. Honourable senators who have a copy of the Bill will realise that this will change the words `shall not be taken to limit by implication the meaning of a reference in this Division' to `shall be deemed not to limit by implication'. As I started to say a moment ago, this may seem to be nitpicking, but one has only to look at some extraordinary narrow interpretations of sections of the Trade Practices Act in some courts to realise that judges sometimes need all the help they can get. This amendment will go some way to providing that help. The Democrats will move what is essentially a minor drafting amendment but which could pre-empt some of the more narrow interpretations that have arisen in the past.

I turn now to the `unconscionable conduct' provision in clause 21. Groups such as the Petroleum Agents and Distributors Association, the Small Business Association of Australia and others believe that it does not go far enough in the sense that protection under the clause does not cover them. They want it extended to cover all dealings. Our amendment will relate to sub-sections (5) and (6) so that they include consumers such as members of APADA in the scope of the legislation. We would also like to see the word `consumer', wherever it occurs in that clause, replaced with the word `person'.

In addition, the insertion of the proposed new section 52 which deals with conflict of interest would require people having any beneficial interest in the commercial transaction involved to declare that interest. Again, that is of some interest to farmers, for example, who regularly sell through agents. Finally, I turn to clause 34 about which, again, the Scrutiny of Bills Committee has expressed some concern at the lack of parliamentary scrutiny or review of sections 65C and 65F. On page 39 of its seventeenth report, the Committee states:

Clause 35 inserts a new Division 1A in Part V of the Act dealing with product safety matters.

It continues:

Notices under sub-sections 65c (5) and (7) are not required to be tabled in Parliament and are not subject to disallowance. There is no effective form of review by an independent, quasi-judicial tribunal of the Minister's decisions to declare goods unsafe or to ban them. The only avenue of review afforded is that, under new section 65j, a draft of a notice under either sub-section must be prepared and suppliers of the goods in question invited by notice in the Gazette to request a conference with the Commission.

The Government's own amendments do something to satisfy concerns expressed by, for example, the Law Council of Australia, in that they have extended the notification process to include contracting and writing as far as possible for supplies of the goods. This does not solve the problem expressed specifically of a non-reviewable decision by a Minister. It is suggested that there should be some reference to bodies such as the Administrative Appeals Tribunal and they reiterate their concern about this matter with a similar concern expressed about clause 65f. Again, we will take that matter up in an amendment provided that the Scrutiny of Bills Committee at its meeting tomorrow morning at half past eight does not reconsider its concern in the light of any response from the Attorney-General.

I repeat that as far as the Australian Democrats are concerned we believe that, with some additional amendments, the Bill before us will significantly improve the manner in which the Trade Practices Act protects consumers. I include in that term small businesses of the kind that form the Council of Small Business Organisations of Australia and the Small Business Association. To that end, this is public spirited legislation which is pro-competition and is not anti-business, but operates in the interests of the business community and individual consumers across Australia.