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Friday, 5 May 1989
Page: 1931

Senator POWELL(2.40) —We are debating this afternoon a matter of public importance raised by Senator Short in these terms:

The threat to both Australian consumers and producers from the promotion of anti-business attitudes and policies including product liability and class actions.

Senator Short must be one of the most strident anti-consumer activists in our country. We have heard from him an unjust attack on consumer organisations. Among other things he has said that the consumer movement is never critical of the Government. He has said that it is so heavily funded by the Government that its hands are tied. I would like to cite a couple of instances to give the lie to that claim.

First of all, the consumer movement in Australia has been among the most strident critics of this Government for its deregulation of the banking industry and the consequences which flow for those who are most disadvantaged in our community, who have really borne the brunt of the increased charges and reduced services that that deregulation has brought upon us. Of course, Senator Short does not wish to raise that matter because the Opposition, during the process of deregulation, has been green with envy as it was unable to get its act together, in terms of its own ideology, when it was in government. Opposition members have had to see the so-called Hawke socialist Government, as it is often termed on that side of the House, do it for them.

I would like to quote from a document prepared by the Australian Federation of Consumer Organisations (AFCO), an organisation so berated by Senator Short. AFCO also criticised the Government. In its monthly newsletter, a paper on the recall of unsafe products submitted to the Office of Consumer Affairs within the Attorney-General's Department, it says:

AFCO also criticised the Government's failure to introduce class actions into Australia. AFCO believes that class actions are part of the essential tools necessary for adequate consumer protection. The Australian Law Reform Commission has had a reference on class actions for a decade. The present Government has successfully contested the last two elections with a policy supporting class actions. The Government should stop `pussyfooting' around and put its policy commitments into action.

Those are just two examples of the consumer movement being far from silent when it comes to criticism of the Government.

Why is this matter before us today? I am sure it is really because Senator Short was wined and dined by the Australian Finance Conference earlier this week. Its objections to the concept of class actions are similar to those expressed by a number of business groups which have taken a particularly knee-jerk reaction to the proposals that have come from the Law Reform Commission on group proceedings and product liability.

I am absolutely unable to see the logic of those critics who, on the one hand, say that these reforms are unnecessary and, on the other hand, say they will be unable to cope with the increased costs they will bring. The Australian Democrats believe the Australian Law Reform Commission deserves to be congratulated on the excellent work it has done in those areas. The reports it has produced are thorough, objective and of great assistance to government and all those involved in law-making in these areas. The Commission has been involved in research and community consultation on these subjects for many years and has comprehensively looked at international practices in order to come up with appropriate proposals for Australia. Just this week we have received Discussion Paper No. 37 on product liability, containing proposed draft legislation.

Senator Short, after complaining that the time scale for comment on this proposed draft legislation is too short, then announced to the Senate that the Opposition is opposed to product liability legislation. If he is going to oppose it he should save his time and not bother to complain that he has not got enough time to look at something which he is determined to oppose anyway. It is a bit shallow to be complaining about the time scale when, since the Law Reform Commission got the reference in September 1987, it has published an issues paper, a major discussion paper and a series of research papers. So anyone interested in this area has not had to wait for this document this week and ought to have at least some of his ideas in some sort of order.

The consultation process and the processes generally used involved consultants from business, professional, consumer and academic circles; many meetings; 200 written submissions; and, as I have said, the gathering of international experience as well. Really, the Commission cannot be criticised for lack of consultation on this or any of the other issues that it has dealt with. On the issue of product liability, it is very difficult, I think, to argue with much in the propositions in this area. What, for instance, are the objectives of reform in the area of product liability? The Law Reform Commission's discussion paper gives the two prime objectives under the heading `Matching risks and benefits' and says that legislation in this area:

. . . should, so far as possible, ensure that the risk of the consequences of the way goods act should be carried by those who obtain economic benefit from manufacturing and supplying them.

I hardly see how anyone can, in principle, argue with that objective. The second objective is headed `Minimising costs'-something that I should have thought Opposition senators would be absolutely in favour of. Under that heading the paper says:

It should not impose unnecessary costs on the manufacture or supply of goods or on the process of determining when compensation is payable.

Surely those are laudable objectives, which I would have expected to have multipartisan support. The paper also notes the desirable characteristics of a product liability scheme. It says that any system of rules should:

require manufacturers and suppliers of goods to bear the risks of the way the goods act

take proper account of other causes of particular losses-

and again we see these words-

minimise costs.

Under the heading `Conclusions' the paper says:

The Commission has concluded that the existing law does not have the desirable characteristics of a law governing liability for loss or damage caused by goods.

The shortcomings are listed, but since all honourable senators have copies of the paper I shall not take the time of the Senate by reading them out. I want to turn to class actions and a number of other issues. The `Conclusions' paragraph ends by saying:

These shortcomings mean that manufacturers and suppliers do not carry the risks when they should, with the result that the price of goods does not reflect all the costs associated with them-

that is obviously the costs to consumers-

and that persons do not have adequate access to the means of enforcing their rights.

Taking into consideration the fact that that assessment was made after two years of work and broad consultation on this issue, I believe that it is clear that we do need further reform in the area of product liability legislation. Certainly the Australian Democrats support that view. I think that it is worth including here a comment from the Opposition spokesperson on these matters, Mr John Moore, who was quoted in an article in the Australian Financial Review of 27 February. The article says:

The Commission's proposals for product-liability law reform is opposed by Mr Moore because it would place `a much heavier onus of proof' on companies defending their products.

If the onus of proof should not be on those reaping the benefit of the product, I really do not know where it ought to be. If I am a consumerist for saying that, so be it.

I want to put on the record the Democrats' long-standing support for class actions. We are determined that such an important area will not be allowed to slip down the priority list of this Government. That is not to be overly critical of the contribution of the present Minister, who, I believe, is attempting to push a somewhat reluctant Government down this track. Group proceedings are really about two things-access and efficiency. They are not about the imposition of new regulations on business for their own sake; they are about ensuring that if there is a law, businesses comply with it, and consumers have the opportunity to seek redress if the law is broken. Consumers need access. If Senator Short or anyone else wants to argue against that, he will have to take the heat from an electorate which is saying more and more clearly that both the Australian Labor Party and the Liberals should stop putting the interests of big business above those of ordinary Australians.

Group proceedings are also about efficiency-the efficient use of the courts to enable a large number of people with the same case to protect their rights in a way that is feasible. Actions that are currently not viable will become viable. Courts will be able to deal in one go with a group of similar actions and this will result in considerable savings for all concerned, not just the consumers. The law, as it stands at the moment, precludes many Australians with valid complaints over faulty products from gaining effective legal redress. Some of those faulty products end in the deaths of some of those people. It will be fairer to people who now lose out because they cannot afford to go to law. By joining others in the same boat they will be able to gain compensation.

There are also benefits for the defendants-those whom Senator Short defends so roundly-namely: reduced costs through basic economies of scale when a defendant can defend all the claims in one action, in one location at one time. Inconsistent results are avoided and the decision is binding on the whole class, thereby resolving the issue once and for all. Settlement negotiations are concentrated and, as a consequence, settlement is approached on a commercial footing rather than the lack of a clear picture which may result in overly generous payments or an unrealistically low figure which has been fixed because of a fear of the commercial consequences of other claims that might come forward.

There are also advantages for the courts. Most notably, the business of the court can be performed with the maximum judicial economy. This ensures that some inefficiency in the administration of justice is not what determines right or wrong. Those who are opposed to class actions rely heavily on the fear of a massive increase in the costs of litigation and they cite the United States of America experience as to why this evil proposal should be resisted. However, they fail to acknowledge that the proposals of the Law Reform Commission differ markedly from United States laws and also that, in any case, the United States is a far more litigious society than Australia.

The claim that business will gain no benefits from the introduction of group proceedings is not correct. I have already outlined a number of benefits that would be available for defendants. Claims that honest and hardworking businesses would be severely disadvantaged by these proposals really have no basis. Quite the opposite is true. Unscrupulous businesses would be adversely affected and that would advantage the reputable ones. At the moment, if there is anti-business sentiment anywhere, it is based on the actions and the responses to those actions in the community. Actions of irresponsible and unscrupulous businesses are probably in the minority since most of our businesses are small businesses.

Claims that there would be an increase in government regulation are really hard to justify. There are a number of areas where, currently, it is feasible only for government to act due to those financial barriers that exist for so many consumers but which, under class actions, could be handled by the consumers themselves. This is really a kind of privatisation of regulation. I would have thought that it should have had the support of the privatisation zealots on my right and I hope that it will gain the support of the deregulationists on my left. Perhaps the Opposition would like to address this inconsistency in its ideology.

There are also claims that the cost to the business community would be too onerous. I have already outlined a number of ways in which there would be savings. If there is an increased cost it will be because many people who are currently justified in claiming compensation are prevented from doing so because of the high cost of initiating individual legal proceedings. Anyone who says that this situation does not need to be addressed is saying in essence that, if damage of $1m is caused to one person, it is quite proper for the person responsible to be held liable to pay compensation. But if damage of $500 is caused to 2,000 people the person responsible is free of liability. Of course, that is a morally indefensible position.

Senator Short's matter of public importance raises the issue of anti-business sentiments and he regularly targets the Australian Democrats, community organisations and consumer groups in his ideological diatribe. It is a matter of enormous importance that we do not fall foul of this ideology. I was disappointed to hear Senator Bolkus saying that the Government is looking at proposals. The Democrats and consumer groups in this country will continue to keep the pressure up for action. Neither we nor the consumer groups in this country will be afraid to be critical of this Government while it only talks and does not act in the interests of Australian consumers.