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Consumerism and the A.L.P.



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CONSUMERISM AND THE A.L.P.

BY

JOHN BROWN

SHADOW MINISTER FOR BUSINESS AND

CONSUMER AFFAIRS, TOURISM AND SPORT

CANBERRA

OCTOBER, 1982

TABLE OF CONTENTS

Page

Summary and Proposals i-viii

I. Introduction 1

2. Government and the Consumer 5

3. Government and Industry 7

4. A Brief Summary of Consumer Protection in the States 8

(A) Departments and Bureaus of Consumer Affairs 8

(B) Small Claims Tribunals and Courts 9

(C) Consumer Legislation in N.S.W. 10

(D) Consumer Legislation in Victoria 11

(E) Consumer Legislation in Queensland 12

.(F) Consumer Legislation in South Australia 13

(G) Consumer Legislation in Western Australia 13

(H) Consumer Legislation in Tasmania 14

(I) Consumer Legislation in the A.C.T. 14

(3) Consumer Legislation in the N.T. 15

(K) Summary 15

5. Constitutional Powers of the Federal Government in the Field of Consumer Protection 16

(A) Trade Practices Act 17

(B) The High Court 18

(C) Consumer Credit Legislation 18

(D) Packaging Labelling and General Information Standards 18

(E) Consumer Education and Information 19

(F) Housing 19

6. The Advertising Industry 20

(A) Advertisers 20

(B) Agencies 20

(CD The Media 21

(D) -Operation of the Industry 22

(i) Advertiser-Ag .ency2 .22

(ii) Agency-Media 22

(iii) Audience Measurement 22

(E) Regulation 23

(a) Australian Association of National Advertisers (AANA) 23

(b) Advertising Federation of Australia (AFA) 23

(c) Media Council of Australia (MCA) 24

(d) Federation of Australian Commercial Television Stations (FACTS) 24

(e) The Federation of Australian Radio Broadcasters (FARB) and the Australian Publishers Bureau (APB) 24

(

f) Australian Advertising Industry Council (AAIC) 24

(F) Voluntary Codes of Ethics 25

(G) The Advertising Standards Council (ASC) 26

(H) Government Regulation 26

(1) How Much is Spent on Advertising 27

(3) Advertising and Information 29

7. Business and the Consumer Movement 31

(A) Apathy 32

(a) Product Complexity 32

(b) Business Boom 33

(c) Unemployment 34

(d) Alienation 35

(B) Business-Reacts 37

8. Who is Responsible? 38

9. The Overseas Experience .38

10. The "Ethnic" Consumer - A Special Case 40

(A) Planning for the future 42

11. Bibliographies 47

SUMMARY AND PROPOSALS

All Australians are consumers. In modern economies many

consumers are placed in a relatively weaker bargaining position

than producers or suppliers.

Consumers are not merely purchasers of goods and

services who are seeking to make an informed choice between a

competing range of products and services and to complete that

purchase at the lowest possible price. They are also employees

who are seeking a stimulating working environment and just

remuneration for their services. They are also taxpayers and as

such are seeking an equitable tax burden of both direct and

indirect taxes and a socially just distribution of these taxes.

In some form or other consumers are also investors in

houses, insurance policies, savings banks and superannuation

funds. They thus provide a share of the funds to support the

investment demands created by their own consumption patterns.

As investors consumers seek the highest rate of return

on the funds they invest. Conversely as borrowers of funds,

consumers seek the , lower interest rates when they invest in

capital goods.

Consumers as voters demand a government prepared to

protect their rights as purchasers of goods and services. The

role of a Labor Government should be to evolve an environment in

which effective protection of consumers is provided without

unnecessarily stifling business investment or activity.

Government action on behalf of consumers is even the

more important in the case of people on lower incomes, immigrants

with a limited command of English and other groups with little

knowledge of consumer rights.

I

A Labor Government will ensure that consumers have real

choices in relation to the goods and services they purchase, are

fully informed about these choices and are protected from unfair

and restrictive practices. To this end high priority will be

given to consumer education programs.

A Labor Government would accept the responsibility to

legislate and otherwise act on behalf of consumers and to assist

them to act effectively in their own interest.

At present there is a variety of State and Federal

Consumer Affairs legislation which is costly to business and the

community in general. There is a pressing need for a co-ordinated

and uniform approach to consumer affairs throughout Australia.

Using its constitutional power.s a. Federal Labor

Government will develop in consultation with the States a "model"

legislation for consumer protection and will seek its adoption as

uniform law throughout the Commonwealth.

Under a Labor Government the proper role of a Department

of Business and Consumer Affairs will be regulatory. The major

legislation to be administered by this Department will include

Companies Law, National Companies and Securities Commission,

Trade Practices Act, a modified prices justification machinery

and the Customs Bureau which are all regulatory arms of

Government. A Labor Government willl strengthen the protection of

consumers by ensuring that all -these legislative arms perform

effectively their regulatory function.

Labor will:

ADMINISTRATION AND POLICY DEVELOPMENT

1. Strengthen the Administration of the consumer affairs functions of the Australian Government; including -

ii

(a)

enforcement of legislation, including Part IV and V of

the Trade Practices Act; (b) upgrading facilities for consumer affairs research and

policy development;

(c) improving consultation and cooperation with the States;

and

(d) better communications and cooperation between various

Government Departments in the field of consumer affairs.

2. Revitalise the National Consumer Affairs Advisory Council by

providing it with adequate funding for its own research and

for the preparation of submissions to Government, and ensure

that the majority of its members represent consumer

interests.

3. Re-establish prices justification machinery with a reformed

charter to regulate the market for products and services

which have majot impact on consumers costs and which are

susceptible to domination by one or a few suppliers.-Cunsumers will be encouraged to represent their interests

before this body.

LEGISLATION

1. Develop in consultation with the states and the A.C.T. model

legislation for consumer protection and seek its. adoption as

uniform law throughout the Commonwealth.

2. In cooperation with the states, establish uniform credit

legislation relating to hire-purchase agreements, debt

collection, repossessing of goods, terms and conditions of

loans and the regulation . of credit reporting to ensure -

a) access of any person to a report on his or her credit

status and the information on which it is based; and b) maintenance of the privacy of the consumer

iii

3.

Legislate for the provision of simplified and understandable

information on credit terms, housing purchses and other areas

of consumer concern and to provide greater protection for

consumers in insurance contracts.

4. Prohibit discrimination in the granting of credit on the

basis, of sex, marital status, religion or ethnic background.

5. Amend the Trade Practices Act to -

a) broaden the definition of consumer to include farmers

and small businessman; and

b) include provisions governing harsh and unconscionable

contracts.

PRODUCT AND INFORMATION STANDARDS

1. Vigorously pursue in consultation with the States, the

development of uniform codes and standards for production,

packaging and labellling, advertising, food and drugs, and

other products and services supplied to consumers.

2. Ensure that all standards and codes are enforced through the

product safety and information provisions of the Trade

Practices Act or other appropriate legislation.

3. Include in food and drug standards requirements in relation

to quality and nutrition, date marking, batch stamping and

unit pricing. Labelling which gives adequate information on

ingredients weight and other relevant features will be

required.

4. Provide for regular testing of products in analytical

laboratories, particularly where the health or safety of

consumers is at risk. Where goods fail to meet standards or

are faulty, effective provisions will apply for the

iv

prohibition of import or supply, or notification and recall

of such goods.

5. Ensure that consumers are provided with all information about

products or services which is essential for informed

decision-making, including the existence of potentially

harmful substances, fuel or energy efficiency, restrictions

on use, capacity, standards rating, and installation and•

component replacement costs.

Imports and exports

1. Deny entry or exit of goods if they violate Australian

standards.

2. Co-ordinate existing government agencies to -d

a) formulate motor vehicle standards and a 'motor vehicle

recall code; and

b) monitor the design and construction of motor vehicles in

accordance with these.

Recall

Take comprehensive and co-ordinated action in conjunction with,

the States where possible to prohibit the supply and provide for

the recall of hazardous products.

CONSUMER EDUCATION

1. In consultation with the States, seek the inclusion of

consumer education in the curriculum at all levels of formal

education.

2. Devise programs for general community education on consumer

issues, including legal rights. Such programs will be

v

promoted through a variety of channels including adult

education and the popular media. Special programs will be

devised for non-English speaking groups, low income earners

and others who experience difficulties in their role as

consumers.

3. Require Government Departments and instrumentalities to

prepare and provide full information to consumers regarding

their activities and. the services they provide.

4. Establish a flexible Federal program in co-ordination with

the States to establish shop-front consumer information

centres by -

a) providing financial and material assistance to local

councils or community action groups or committees;

b) encouraging the inclusion of such shop-front centres in

major shopping centres;

c) taking special steps to safeguard the interests of rural

consumers, both in respect of prices and range and

quality of goods and services available; and

d) investigate the establishment of a . ntional product

information bank.

5. Provide financial and other assistance to consumer groups to

facilitate their efforts to increase awareness of consumer

rights and responsibilities, to encourage research and the

dissemination of information which assists consumers to

.exercise choices effectively, and to enable consumer

viewpoints to be represented to Government tribunals, courts

and industry.

CONSUMER PARTICIPATION

1. Give consumer representatives direct and effective

representation in governmental decision-making.

vi

2.

Provide a system of legal aid to ensure ready and equal

access to various Tribunals onissues affecting consumers.

3. Increase funding for AFC0 to enable it to co-ordinate

effectively the activities of various consumer organisations

in Australia.

FOOD STANDARDS

1. Enact in consultation with the States a National Food Act to

obtain uniform food standards including:

(a) quality and performance standards

(b) date marking and unit pricing

(c) adequate labelling standards particularly in relation to

ingredients, nutritional value, storage and weight

(d) frozen and refrigerated products to indicate

deterioration by temperature and age.

2. In cooperation with the States work for the establishment of

a preventive National Nutrition Policy.

PACKAGING AND LABELLING

1. Establish in connection with the States uniform codes and

standards for the packaging, labelling and advertising of

consumer goods.

2. Ensure that labelling is effectively informative and where

necessary it is provided also in languages_ other than

English..

3. Ensure that labels are not too technical to be of interest

and help to consumers.

vii

4.

Prevent deceptive, wasteful or environmentally destructive

packaging.

HOUSING

Encourage State Governments to simplify and standardise lease

documents; co-ordinate efforts to update and improve landlord and

tenant legislation and ensure that home owners are protected from

unscrupulous building contractors.

CONSUMER INFORMATION

1. Establish an Information and Data Centre to collect and

analyse data. on death and inuuries associated with consumer

products.

2. Disseminate information about hazardous consumer products,

misleading advertising, faulty packaging, unsatisfactory

labelling and practicable means of overcoming these

practices.

3. Commission papers, organise seminars, prepare films and other

materials including television programs which can help with

consumer education. Particular attention will be paid to

people from a non-Anglo-Saxon background and their

information needs.

viii

1. INTRODUCTION

As Australian society changes, so do the aspirations and

needs of consumers. In a world of ever-increasing complexity,

comiumers expect more help from both business and government and

greater understanding and fulfillment of the wants and needs that

comprise consumers satisfaction. They also expect ever-higher or

at least maintenance of the existing standards of perforihance,

quality,-safety and integrity from business, as well as the goods

and services marketed today.

The current wave of consumerism is not unprecedented in

the history of business. However, this time consumerism is

enhanced by several major factors. Increased leisure time, higher

incomes, higher educational levels and general affluence have

tended to magnify and intensify the forces of consumerism.

Consumer expectations with respect to the products they

purch.ase are founded in a quest for individuality. Yet the market

provides mass consumption products with which individuals are not

completely satisfied.

Inflation has made purchase behaviour even more

difficult. Rising prices have led consumers to increased quality

expectations which are not achieved, thus again contributing to

the frustration of consumers.

Product improvements have led to increased product

complexity. This complexity has been stimulated by the emergence

of new technology. But new technology has led to increased

•service difficulties as well as performance and reliability

problems. Moreover through advertising and the media, society has

been thoroughly conditioned to expect perfection from its

technology.- Organ transplants, landings an the Moon, Venus and

Mars, jet transportation, miracle drugs make the consumer wonder

why zipper manufacturers cannot make one that will not jam.

2.

The high degree of perfection that has been achieved- in

recent years in a few fields only serves to disguise the lack of

higher average levels of technical proficiency of present day

manufacturing. The consumer is demanding better products than

those presently available, regardless or indeed because of the

economic and technical ability of the firm to provide it.

Consumers and consumer organisations are claiming that

industry has neglected its responsibility.

It is imperative that industry recognise the message and

seriousness of the consumer movement and take positive action now

rather than having to live with legisation that might not be in

the best interest of the industry.

Consumerism and the consumer affairs movement is

primarily the result of a lack of full factual and relevant

information . on the part of consumers which hinders their ability to make properly informed choices between competing products.

This reflects itself in an ever increasing gap between product

expectations and product performance. For the most part the

owner's problem is not fraudulent or deceptive practices, rather

it is a problem of inadequate or nonexistent communications. This

seems to be incongruous since communication efforts '- primarily

advertising.- exist in great abundance. However,, communications

between the producers and the consumers emp.hasise imagery at the

expense of information.

Consumerism is attempting to tell industry something

their research has not found, or that management has rejected or

ignored. Appropriate information flow from the firm to the market

in the form of product performance characteristics,

simple-language warranty specifications and safety standards as

well as meaningful and honest dialogue will improve the basic

customer-firm relationship.

3.

The other link in this communication structure, that of

the consumer to the firm should be explored. It is imperative

that some mechanism be developed which will enable the consumer

to communicate more directly with mangement. The consumer does

have something to say. Management must learn to listen, and

translate this information into action.

The more technology advances • the more deeply will

industry become involved in social issues. The argument that

business has no responsibility but to satisfy consumer wants, is

an open invitation to government regulation. In the short run

some consumers do not always comprehend the personal effects of

their own wants (e.g. the hazards aassociated with tobacco

smoking) let alone the social effects (e.g. unreturnable

containers, DDT, pressure cans etc). When business does not

accept social responsibility, public regulation is -eventually

forced upon it.

As far as Government regulation is concerned Labor will

seek the cooperation of the State Governments and industry to

introduce uniform legislation throughout Australia. This would be

best achieved by introducing a series of model laws in the A.C.T.

which could serve as a basis for State legislation.

State governments will be offered assistance and

incentives by the Federal Government in order to introduce such

uniform legislation. However, consumers over many years have

been at the mercy of an unregulated and sometimes irresponsible

system of service provision. The network of services can range

from medical and dental procedures through mechanical and

electrical trades right down to hairdressing, gardening and

Government-departments. Consumers using these various services

are vulnerable to abuse because in most cases there is no

guarantee available . as to the efficiency or efficay of the services provided. The problem of course has been compounded

with the increasing technological complexity of consumer goods.

4.

Complicated computer controlled circuits on motor vehicles would

be one good example of how "non-mechanically minded" consumers

can be expolited by "smart" firms and individual tradesmen. Fear

of the unknown and ignorance of technology especially with

electricity, gas, television, air-conditioning etc., will always

leave the typical consumer in a weakened position and to be open

to exploitation by "sharks".

Doctors and Dentists of course are under no legal

compulsion to guarantee the efficiency or accuracy of the

services they provide. Many consumers have learned to their

personal cost and detriment the difficulty of seeking redress for

inefficient services provided by irresponsible or unskilled

members of these two exalted professions. How many patrons have

returned lamenting from the hairdresser when their set or perm

fell out on the way home. House proud decorators find to their

discomfort that the newly-applied paint starts to flake almost as

soon as the painter has left. A common complaint concerns the

shrubs that die almost as the landscaper is loading his truck to

leave the site.

Members of Parliament are very familiar with the

complaints of constituents unhappy with the advice or service

they have received from various government departments. Worse

still is the problem of complaining to a consumer affairs bureau

about a hard experience with another Department of the same

government. Many electorate office staff and Members of

Parliament spend most of their time handling complainats about

various Government Departments. Almost no area of Government

service is immune from these complaints. They range from

immigration through social security and education to taxation

problems.

Probably no area of Consumer protection has had less

attention from consumer bodies and governments than the vexed

area of the delivery of services: A faulty toaster or a packet of

5.

weevil-infested flour present no problems to even the

less-discerning consumer - "return to supplier".

However, a faulty perm, an over-charge from an

el.ectriican, plumber, or watchmaker or a faulty amalgam filling present real difficulty when retribution is sought. It is time

governments at all levels of consumer legislation took a long and

searching look at this problem of less than adequate delivery of

service,- particularly in regard to their own agencies and

departments.

It's worth emphasising also that in the case of

recalcitrant States or industries the Federal Government does

have constitutional powers to enforce legislation especially in

fields where the health and safety of Australians is at stake.

Australia is at a point of profound change from an

industrialised society to a "technological" (or post industrial

society). From a society in which production of goods was of

primary concern to one dominated more by services and the

generation and use of knowledge. The essential part of this

period of transition is the attempt to shift from a reactive form

of public decision making in which we respond to problems when

they are forced upon us, to an anticipatory form, in which we try

either to avoid them or are prepared to deal with them as they

emerge.

2. GOVERNMENT AND THE CONSUMER

Consumers for long have been the subjects of political

concern, yet their problems as purchasers are now probably

greater than ever before. The failure of public policy to respond

adequately to consumer needs must be one of the most perplexing

chapters in any examination of our Federal and State Governments'

response to the challenges of an increasingly complex economy.

6.

What is particularly intriguing is that •the consumer

difficulties in the market place have long been recognised, both

by the public in general and the politicians themselves. Yet

little or nothing has been done about it. Most of what has been

done has been on an ad-hoc basis, or the attempt has been inept

(T.P.C. staff cuts and political interference).

While we recognise that the consumer is as important as

the producer to the Australian economy, the government has been

concerned far more with the interest of producers. Although

competition is essential to a free enterprise economy the

businessman and large enterprises have eagerly sought to secure a

monopolistic or protective shelter from its harsh winds.

As a result of the attention accorded to producers, the

consumer's problems have been considered only erratically and on

an ad-hoc basis. In contrast to producers who are armed with

information and who are able to make informed, rational

decisions, the individual buyer, who is exposed to advertising,

deceived by 'packages, confronted with an expanding range of

highly complex goods, limited in time, is simply not qualified to

buy discriminately and wisely. Governments both State and Federal

in 'spite of the quantitatively large number of steps taken with

the declared objective of aiding the consumer, have not helped

significantly to correct this imbalance between producers and

consumers. Indeed both State and Federal Governments sould have

a closer look at their own "back yards". After all they are

major providers of services to consumers in the area of welfare,

utilities, transport etc., and their performance. often leaves a

lot to be desired.

One major reason for the lack of Government action in

this area is that the problems of the consumer have never been

defined in any systematic fashion. Consumer problems have almost

always been viewed on an ad-hoc basis and as isolated cases to be

resolved individually. Seldom have these problems been .. placed in

7.

a more general framework or seen as symptoms of a funamental

economic disorder that must itself be diagnosed. andtreated.

Labor will try to assist consumers to redress the

balance and safeguard their interests. Let vigorous price and

quality competition be the determinants of marketplace success.

3. GOVERNMENT AND THE INDUSTRY

Unfortunately at present, a characteristic of government

- business dialogue regarding consumer issues is that meaningful

discussions are usually held only in a time of crisis. The

problem with this approach is that crises are not the ideal

environment for arriving at solutions which are equitable to all

parties concerned.

It seems obvious that consumerism will affect

industries, firms, governments and if it is effective the

consuming public. Yet unlike in America, businessmen in Australia

have not really learned to work with the consumer movement. They

see consumer organisations in an adversary role and dialogue

takes place mainly in the front pages of newspapers.

Business and industry must come to realise that the

consumer movement rather than "disappearing" will develop more

power as its forces become more co-ordinated and as it develops

more leadership and organisation. This will be manifested in

legal remedies. Indeed some consumer groups, are already

advocating class suits.

It appears that the success of consumerism will depend

largely-on governmental involvement. For example certain product

safety standards, health standards, date stamping and other

legislative arrangements are already in force. As the great

number and variety of State bills on consumer protection indicate

the role of both Federal. and State Governments can be expected to

be greater in the future.

8.

Business must come to realise that Government is a

resource. Most politicians are well aware that unnecessary and

burdensome legislation in the field of consumer affairs will

hinder development and will send prices sky-rocketing. In order

to find an . effective working relationship between the business community and government what we need is consultation and

cooperation. What industry wants is uniform legislation which

applies throughout Australia and long term planning. On-again

off-again policies and short term remedies will help neither the

consumer nor the industry.

The Labor party is not about more regulation. What we

aspire towards is the removal of superfluous unwieldy

proliferation of regulation for regulations sake and the

streamlining and simplification of necessary regulation.

Compliance by industry with unnecessary, diversified, and ever

changing or involved regulation in the long run raises prices and

in fact acts against the interest of consumers. Easily understood

and uniform regulation has the reverse effect of protecting

consumers, and lowering prices while retaining efficiency in the

business area and providing the incentive for further investment.

4. A BRIEF SUMMARY OF CONSUMER PROTECTION IN THE STATES

(A) Departments_and Bureaux of Consumer_ A ffairs

The States and Territories have set up bodies to handle

consumer complaints and advise their respective Governments on

policy matters. While some of these bodies and bureaux act mainly

as "gatherers" of complaints some others have an investigative

role as well. Indeed in N.S.W. they have the power of entry and

seizure and it is a criminal offence to give false information or

to impede an authorised officer.

9.

The legislation setting up the various State consumer

affairs bodies are:

N.S.W. Consumer Protection Act 1969

Vic. Consumer Affairs Act 1972

Qld Consumer Affairs Act 1970-1974

S.A. Prices Act 1948-1980

W.A. Consumer Affairs Act 1971-1980

Tas. Consumer Affairs Act 1970

A.C.T. Consumer Affaairs Ordinance 1970

N.T. Consumer Protection Act 1978

(B) Small Claims Tribunals and Courts

These courts and tribunals are of particular benefit to

consumers and they seem to avoid the high cost of pursuing a

legal claim in the ordinary courts. Procedures are kept informal

with no strict rules of evidence and usually legal representation

is not allowed. The Small Claim Tribunals and Courts are limited

in the orders they can make to the following amounts.

N.S.W. $1500

Vic. $1500

Qld $1000

W.A. $1500

S.A. $ 500

N.T. $1000

A.C.T. $1000

The decisions of the courts are final but the emphasis

of the legislation is negotiation and consensus. Thus the general

thrust is towards attempting to settle disputes between the

parties rather than lengthy and costly litigations.

matters which can be dealt with difer as well For

example I.S.W. can deal with doctors etc, while other States

cannot.

10.

The relevant legislation in relation to small claims in

various States is as follows:

N.S.W. Consumer Claims Tribunals Act 1974

Vic. Small Claims Tribunals Act 1973

Qld Small Claims Tribunals Act 1973-1978

S.A. Local and District Criminal Courts Act

1926-1980

W.A. Small Claims Tribunals Act 19.74-1978

A.C.T. Small Claims Ordinance 1974

N.T. Small Claims Act 1974

(C) Consumer legislation in N.S.W.

At present there are the following "consumer"

legislations in N.S.W.

Book Purchasers' Protection Act, 1899-1963 Book Purchasers' Protection Act Regulations, 1899 Commercial Agents and Private Inquiry Agents Act, 1963 Commercial Law (Miscellaneous Provisions) Act, 1975 Commercial Transactions (Miscellaneous Provisions) Act, 1974

Consumer Claims Regulations,. 1976 Consumer Claims Tribunals Act, 1974 Consumer Protection Act, 1969 Consumer Protection (Date Stamping) Regulation, 1978

Consumer Protection (Instructions for Care of Goods)

Regulation, 1979 Consumer Protection (Miscellaneous Provisions) Regulation, 1978 Consumer Protection (Safe Design and Construction of Goods)

Regulations Consumer Protection (Safer Goods) Regulation, 1976 Consumer Protection (Trade Descriptions) Regulations Contracts Review Act, 1980 Credit-sale Agreements Act, 1957 Credit-sale Agreements Regulations, 1957 Disposal of Uncollected Goods Act, 1966 District Court (Contracts Review) Amendment Act, 1980 Door-to-Door Sales Act, 1967 Door-to-Door Sales Regulations, 1967 Gaming and Betting Act, 1912 Hire-Purchase Act, 1960 Industrial Arbitration Act, 1940

11.

Lay-by Sales Act, 1943 Lay-by Sales-Act, Regulations, 1943 Lotteries and Art Unions Act, 1901 Marking of Furniture Regulations, 1947 Mock Auctions Act, 1973 Moneylending Act, 1941

Moneylending Regulations, 1941 Motor Dealers Act, 1974 Oil-burning Appliances Regulations, 1968 Prices Regulation Act, 1948-1949 Pyramid Sates Act, 1974 Referral Selling Act, 1974 Sale of Goods Act, 1923

Soccer Football Pools Act, 1975 Textile Products Labelling Act, 1954 Trade Descriptions (Bedding and Upholstered Furniture) Regulations, 1953 Trade Descriptions (Footwear) Regulations, 1974

Trade Descriptions (Leather Goods) Regulations, 1950 Trade Descriptions (Miller Brooms) Regulations, 1954 Trade Descriptions (Toys) Regulations, 1958 Trading Stamps Act, 1972 Unsolicited Goods and Services Act, I974 Warehousemen's Liens Act, 1935

The area covered by these laws is diverse. But, broadly

they cover the following fields in consumer protection.

These laws:-

(a) regulate the conduct of transactions involving consumers or provide for the licensing and conduct of certain trades

(b) regulate undesirable practices which are potentially damaging to consumers

(c) provide physical protection

(d) provide legal remedies or impose terms in commercial transactions

(e) establish institutions for the protection of consumers.

(D) Consumer Legislation in Victoria

Victoria is one of three States (Qld, S.A.) which have

enacted credit reporting laws, which give consumers who have been

12.

refused credit the opportunity to challenge and correct any wrong

or existing information on their file. Other Acts specifically

designed to protect the consumer in Victoria are:

Consumer Affairs Act 1972 Consumer Affairs Act, Regulations Act 1978 Credit Reporting Regulations 1978 Disposal of Uncollected Goods Act 1961 Goods Act 1958 Hire-Purchase Act 1959 Lotteries Gaming and Betting Act Market Court Act 1978 Market Court Regulations 1979

Under the Credit Reporting

Ministry of Consumer Affairs Act 1973 Money Lenders Act 1958 Money Lenders Regulations Motor Car Traders Act 1973

Private Agents Act 1966 Small Claims Tribunals Act 1973 Small Claims Tribunals Regulations 1974

Warehousemen's Liens Act 1958 Weights and Measures Act 1958

(E) Consumer Legislation in Queensland :

Art Unions and Amusements Act 1976 Auctioneers and Agents Act I971-1977 Consumer Affairs Act 1970-1974 Disposal of Uncollected Goods Act of 1967, The

Door to Door (Sales) Act 1966-1973 Door to Door (Sales) Regulations Factories and Shops Act, 1960-1975, The Health Act 1937-1976

Hire-purchase Act of 1959, The Invasion of Privacy Act 1971-1976 Invasion of Privacy Regulations 1972 .Mock Auctions Act 1973

Money Lenders Act 1916-1979 Money Lenders Regulations of 1933, The Profiteering Prevention Acts, 1948 to 1959, The Pyramid Selling Schemes (Elimination) Act 1973

Sale of Goods Act of 1896, The Second-hand Wares Act of 1921, The Small Claims Tribunals Act 1973-1978 Small Claims Tribunals Regulations 1973

Suppression of Gambling Acts, 1895-I964, The Trade Coupons Acts, 1933 to 1947, The (Repealed 1978) Unordered Goods and Services Act 1973-1974

Vagrants, Gaming, and other Offences Act 1931-I971 Weights and Measures Act 1951-1978

13.

(F) Consumer Legislation in South_ Aust ralia

Arbitration Act, 1891-1974 Book Purchasers Protection Act, 1963-1972 (repealed) Commercial and Private Agents Act, 1972 Consumer Credit Act, 1972-1980 Consumer Credit Act Stipulations Consumer Credit Regulations, 1973-1980

Consumer Transactions Act, 1972-1980 Consumer Transactions Regulations, 1973-1980 Debts Repayment Act, 1978 Defective Houses Act, 1976

Door to Door Sales Act, 1971-1979 Door to Door Sales Regulations, 1979 Fair Credit Reports Act, 1974-1975

Fair Credit Reports Regulations, 1975 Fair Credit Reports (Reporting Agencies) Regulations, 1975 Flammable Clothing Act, 1973 Goods (Trade Descriptions) Act, 1935 -1969 Local and District Criminal Courts Act, 1926-1980 Lottery and Gaming Act, 1936-1980 Manufacturers Warranties Act, 1974

Misrepresentation Act, 1971-1972 Mock Auctions Act, 1972 Packages Act, 1967-1972 Prices Act, 1948-1980 Pyramid Sales Act, 1973 Sale of Goods Act, 1895-1971

Second-hand Motor Vehicles Act, 1971 Trade Measurements Act, 1971-1976 Trade Standards Act, 1979 Trade Standards Regulations, 1980 Trade Standards (Furniture) Regulations, 1980 Trading Stamp Act, 1924-1935 Unfair Advertising Act, 1970-1972 Unordered Goods and Services Act, 1972

It's worth pointing out that most of the consumer

protection legislation was introduced by the South Australian

Labor Government. In fact in 1972 South Australia became the

first, adn still the only State to enact a more modern credit

regulatory system.

(G) Consumer Legislation in Western Australia

Auction Sales Act 1973-1978 Clothes and Fabrics (Labelling) Act 1973 Consumer Affairs Act 1971-1980 Debt Collectors Licensing Act 1964-1966 Disposal of Uncollected Goods Act 1970 Disposal of Uncollected Goods Regulations 1971

14.

Door to Door (Sales) Act 1964-1980 Door to Door (Sales) Regulations 1965 Factories and Shops Act 1963-1976 Hire-Purchase Act 1959-1980 Hire-Purchase (Credit Providers Licensing) Regulations 1975 Hire-Purchase (General) Regulations 1975 Lotteries (Control) Act 1954-1972 Money Lenders Act 1912-1979

Money Lenders Regulations 1912-I937 Motor Vehicle Dealers Act 1973-1979 Pawnbrokers Act 1860-1944 Pyramid Sales Schemes Act 1973-1975 Sale of Goods Act 1895, The Small Claims Tribunals Act 1974-1978

Small Claims Tribunals Act, Regulations 1975 Trade Associations Registration Act 1959 Trade Descriptions and False Advertisements Act 1936-1979 Trade Descriptions and False Advertisements Regulations 1937 Trading Stamp Act 1948 Unsolicited Goods and Services Act 1973 Warehousemen's-Liens Act 1952-1954

(H) Consumer Legislation in Tasmania

Advertisements (Terms of Purchase) Act 1973 Commercial and Inquiry Agents Act 1974 Consumer Affairs Act 1970 Disposal of Uncollected Goods Act I968 Disposal of Uncollected Goods Regulations 1968 Door to Door Sates Act 1967 Door to Door Sales Regulations 1968 Flammable Clothing Act 1973 Goods (-Trade Descriptions) Act 1971

Hire-Purchase Act 1959 Lending of Money Act 1915 Mock Auctions Act 1973 Pyramid Selling Act 1974 Racing and Gaming Act 1952 Sale of Goods Act 1896 Sale of Hazardous Goods Act 1977 Sale of Hazardous'Goods Regulations 1977

Trading Stamps Abolition Act 1900 Unordered Goods and Services Act 1973 Weights and Measures Act 1934

(I) Consumer Legislation in the A.C.T.

Children's Flammable Nightwear Ordinance 1975 Consumer Affairs Ordinance 1973 Courts (Hire-Purchase Agreements) Ordinance 1963 Door-to-door Sates Ordinance 1969 Hire-purchase Ordinance 1961 Instruments Ordinance, 1933

15.

Law Re form (M

anu

f

a cturers Warranties) Ordinance 1977

Law Reform (Misrepresentation) Ordinance 1977 Lay-by Sales Agreements Ordinance 1963 Lotteries Ordinance 1964 Money Lenders Ordinance, 1936

Public Health Ordinance, 1928 Pyramid Selling Ordinance 1973 Sale of Goods Ordinance 1954 Sale of Motor Vehicles Ordinance 1977 Small Claims Ordinance 1974 Trading Hours Ordinance 1962

Trading Stamps Ordinance 1972 Weights and Measures (Packaged Goods) Ordinance 1970

(J) Consumer Legislation in the Northern Territor

Commercial and Private Agents Licensing Act 1979 Consumer Protection Act 1978 Disposal of Uncollected Goods Act 1976 Disposal of Uncollected Goods Regulations 1977 Door to Door Sales Act 1967

False Advertising Act 1970 Hire-Purchase Act 1961-1965 Hire-Purchase Regulations Lottery and Gaming Act 1940 Money-lenders Act and Ordinance 1903-1970 Motor Vehicle Dealers Act 1979

Sale of Goods Act 1972 Small Claims Act 1974 Unordered Goods and Services Act 1972 Warehousemen's Liens Act 1969

(K) Summary

Even by simply glancing through the names of various

Acts in the States and Territories it becomes evident that there

are a number of similarities between them in as much as they

attempt to provide protection to consumers on a number of areas.

However it becomes obvious also that consumer protection

regulation by individual States has led to a haphazard,

uncoordinated and a nationally fragmented approach.'

While the importance of consumer protection specifically

designed to suit local conditions in various States should not be

overlooked, there is a need also for a more co-ordinated and

uniform approach to these issues throughout Australia. Such

16.

uniform or "universal" laws are even more important if we

consider that the tendency of manufacturers, retailers and

financiers over the last decades has been more and more towards

national distribution, national marketing and a national approach

towards the provision of guarantees and warranties. State

boundaries have turned us into seven Nations on an island

continent.

The Federal Government should achieve a co-ordinating

role as far as legislation in the field of consumer protection is

concerned and should provide also a long term "master" plan in

order to protect business from unnecessary duplication or

burdensome requirements at short notice.

Unfortunately following the MacKellar Case "colour

television affair" and the subsequent Ministerial reshuffle the

government rather than strengthening it seems to have abdicated

it's responsibility in the field of consumer protection. The

general tendency in the OECD countries has been towards the

establishment of Federal consumer affairs departments which can

assume a co-ordinating and planning role in the respective

countries. The United States in the past has been one of the

strongest advocates in this direction. The decision to abolish

the Department of Business and Consumer Affairs and to scatter

its role in four different departments has put Australia back by

at least twenty years as far as consumer protection is concerned.

5. CONSTITUTIONAL POWERS OF THE FEDERAL GOVERNMENT IN THE FIELD

OF CONSUMER PROTECTION

Provided that •the Constitution contains heads of power

which would support Commonwealth legislative action in a given

field, then any Commonwealth law can regulate activities in that

field to the exclusion of State law. A State law will be

inoperative to the extent of its inconsistency with the

Commonwealth law'(s.109 of the Constitution).

17.

(A) Trade Practices Act

The Commonwealth has already enacted substantial

consumer protection laws under Part V of the Trade Practices Act

1974. These laws are based on the corporations power (s.51(XX) of

the Constitution) the trade and commerce power (s.51(i)), the

territories power (s.122) and the posts and telegraphs power

(s.51(v)). With the help of these powers the Commonwealth has in

Part V:

1. prohibited misleading or deceptive conduct

2. prohibited false representations in connection with the supply of goods or services

3. prohibited certain undesirable market practices such as bait advertising, referral selling, coercion at -place of residence, pyramid selling

4. provided for the promulgation of safety and information standards in relation to products

5. automatically imposed certain implied conditions and warranties which cannot, be waived by parties to the transaction

6. automatically imposed manufacturers and importers warranties

The Trade Practices Act is drafted in a way calculated

to achieve maximum constitutional spread. The basic thrust •of the

Act is to prohibit "corporations" engaging in the conduct

described but "persons" will also be caught in the territories or

where interstate or overseas trade and commerce is involved. The

posts and telegraphs power further helps in false advertising

situations to catch people under Division 1 Part V of the Act who

might not otherwise be caught.

The , above

bases for the enac

protection field.

corporations power.

control "foreign

corporations formed

consitutional framework shows the possible

-tment of Commonwealth Laws in the consumer

The main power to be relied on is the

Section 51 (xx) is limited by its terms to

corporations, and trading or financial

within the limits of the Commonwealth".

18.

(B) The High Court

The High Court trend as far as Sec. 51(xx) is concerned

has increasingly been towards a wide interpretation of "trading

corporations" (Adamson's Case 23 ALR 439). Judicial

interpretation has not extended the power to regulating the

internal affairs of corporations. But it is clear since the

Concrete Pipes Case ((1971) 124 CLR 486) that the corporations

power is sufficient constitutional basis for Laws regulating the

trading activitio#s of corporations. A further High Court decision

is expected shortly on the extent of the corporations power.

(C) Consumer Credit Legislation

Paragraphs 51(xvi) and (xvii) of the Constitution could

touch on some areas of potential consumer credit legislation.

These paragraphs give power to make laws on bills of exchange and

promissory notes, and bankruptcy and insolvency, respectively.

However, the only comprehensive source of power would again be

the corporations power. According to the current interpretation

of that power, it would be possible to prohibit corporations from

giving credit unless certain requirements are complied with. For

example, a corporation involved in the giving of credit could be

prohibited from discriminating (on the basis of sex, marital

status, etc) in the granting of credit.

(D) Packaging, Labelling and General Information Standards

In relation to all matters which bear on the giving of

information at the point of sale, the procedure for this is

already established by section 63 of the Trade Practices Act.

That section provides for the promulgation of standards dealing

with the disclosure of information on the goods. This would cover

quality and performance standards, date marking and unit pricing,

information on ingredients etc. Providing for the testing of

goods in analytical laboratories may be more constitutionally

19.

difficult depending on whether it was the Commonwealth which

provided the laboratories.

The Commonwealth already prohibits imports of goods and

cZin use this power (:x.5.1(1) overseas trade and commerce) to keep

out goods which do not comply with safety standards. Packaging

and labelling generally could be controlled by using the

corporations power to lay down the packaging and labelling

requirements with which corporations must comply.

(E) Consumer Education and Information

The Commonwealth has no power under the Constitution to

make laws with respect to education but it has played a part in

this field through the granting of financial assistance to the

States. These grants under section 96 of the Constitution can be

made subject to conditions. This is an effective way of

implementing education programs. Direct grants to community

groups for the purpose of consumer education is another feasible

way of achieving Commonwealth involvement in this field.

Activities in relation to the dissemination of

information are already carried on by the Trade Practices

Commission pursuant to section 28 of the Trade Practices Act. It

seems that the Commonwealth can perform this educative role

pursuant to a variety of Constitutional powers.

(F) Hous ing

The Commonwealth has no power to make laws with respect

to housing but again has a legitimate role to play in this field

pursuant to the executive power (section 61 of the Constitution)

and section 96. As in the field of education, the Commonwealth

could make grants to the States subject to various conditions,

thus achieving an input into the housing policy field. It might

be possible to regulate misleading or unscrupulous behaviour on

20.

the part of building contractors on the same basis as present

consumer protection provisions in the Trade Practices Act.

6. THE ADVERTISING INDUSTRY

Advertising is part of the sales process. It has an

important place in the marketing of goods and services.

Advertisers employ different techniques and they have varying

objectives when attempting to promote a product. These objectives

and techniques are sometimes subject to debate and criticisms.

One thing however remains indisputable as a result of advertising

the public becomes better informed about the availability of

products in the marketplace.

The advertising industry is made up of three main groups

(a) advertisers; (b) agencies and (c) the media.

(A) Advertisers

Advertisers are organisations who want to direct a

message to the public through the media e.g. companies,

governments, statutory authorities. The largest advertisers are

marketing companies and big service organisations such as

government departments.

(B) Agencies

There are approximately 350 advertising agencies in

Australia. Of these 20 handle 60 per cent of all advertising and

10 handle 50 per cent. Agencies are used by advertisers to create

advertisements and place them with the media.

Included in the top 10 of agencies are only two

Australian owned.. These are Monahan-Dayman, Adams and Fortune.

The rest are owned by overseas agencies but mainly staffed by

locals. George Patterson is the largest agency and has an

estimated turnover of $100m.

21.

The largest advertising agency employs about 500 people

nationwide. The bigest single office has 250 employees, but a

large number have as few as three people on staff. All included

it is estimated that agencies are directly responsible for about

7000 jobs.

There is a tendency towards large agencies in Australia

as smaller agencies are not able to compete for personnel with

larger agencies as salaries in the industry are very high; also,

large clients tend to use large agencies.

Profitability,, of the agencies is not great. According

to well placed sources within the industry an agency which is

said to have billings of $10 million is in fact directly

re-spending around $8.25 million with outside suppliers and the

media. From the other $1.75 million the agency must cover its

costs and overheads, chiefly the salaries of its staff.

(C) The Media

The media conveys messages including advertising to the

public through its newspapers, magazines, T.V., radio, cinemas,

posters, pamphlets etc. In Australia there are some 500

newspapers, 100 successful magazines, 120 commercial radio

stations and 50 commerical television stations.

As such the advertising industry supports thousands of

other jobs. Principally there are the commercial television and

radio stations, newspaper and magazines which simply couldn't

exist without advertising. In addition there are also the

industries devoted chiefly to servicing advertising such as

technical crews, actors and actresses, type and blockmaking,

photography, commercial artists and designers, printing etc.

22.

(b) Operation of the industry

(i) Advertiser-Agency

This relationship is based on mutual respect. The agency

prepares the total marketing campaign for the advertiser. It has

been determined by the Trade Practices Tribunal that agencies are

agents of the advertisers not the media despite the . fact that the usual form of remuneration is a service fee paid by the

advertiser to the agency of 7.5 per cent as well as a commission

allowed by the media to the agency at the rate of 10 per cent for

print and T.V. and 12.5 per cent for radio.

(ii) Agency-Media

It could be argued that the media effectively regulates

the advertising industry as it determines the accreditation of

agencies. Through the Australian Accreditations Bureau, the media

operates an accreditation system in which agencies that can

satisfy the media as to the financial viability and willingness

to adhere to ethical and technical standards are "accredited" or

registered. This allows an agency to place unlimited amounts of

advertising with any of the media subject to settlement within 45

days of placement. Failure to settle within this time can lead to

accreditation being withdrawn. Commission is paid to accredited

agencies only.

(iii) Audience Measurement

The media usually commissions market research companies

to collect the necessary information.

TV: Each year 6 TV stations in Sydney and Melbourne commission audience surveys for a total of 32 weeks.

24.

c) Media Council of Australia (MCA)

The council was established in 1969 and brings together

the main elements of commercial mass media. It is a unique

organisation with no comparable body in other countries. It is

responsible for the overall authority on media matters and

accreditation of advertising agencies. The general organisation

of the advertising industry's self-regulation codes is conducted

by the MCA and it is the MCA whd.ch submits the codes to the Trade

Practices Commission for authorisation.

d) Federation of Australian Commercial Television Stations (FACTS)

FACTS represent 50 commercial TV stations and has three

main functions. These are to represent the interests of

commercial TV to governments and the public; to market the medium

to advertisers and agencies; to preview and approve all pre-made

national commercials in relation to government legislation,

Australian, Broadcasting Tribunal regulations and the industry's

self-regulation codes.

e) The Federation of Australian Radio Broadcasters (FARB)

and the Australian Publishers Bureau (APB)

They represent the commercial radio stations and print

media respectively and have the same objectives as FACTS.

f) Australian Advertising Industry Council (AAIC)

The council was formed in 1978 by the AANA, the AFA and

the MCA to create a positive attitude to advertising on the part

of consumers and legislators; to explain the role of advertising

in the free enterprise system; to promote the benefits of

advertising to consumers. It also provides an institutional

structure for the three affiliated organisations to discuss

objectives and reach common policies.

25.

(F) Voluntary Codes of Ethics

Each of the voluntary codes of ethics are administered

by the Media Council of Australia. All advertising that falls

within the sphere of these codes must be submitted to the

relevant bodies of the Media Council for approval. Without this

approval, the advert is not permitted to appear.

The current voluntary codes are:-a) Voluntary code for advertising goods for therapeutic

use.

b) Voluntary advertising code for cigarettes

c) Voluntary code for advertising of alcoholic beverages

d) Guidelines for hair-piece/treatment advertising

e) Code for advertising slimming aids etc.

f) Domestic insecticide advertising code

g) Mail order

The Advertising industry sees itself as being already

heavily regulated both voluntarily and by governments. But, from

time to timesome aspects of advertising have caused legitimate

concern amongst legislators and consumer groups.

It must be recognised, also, that over the years

advertising has come to be governed by a most pervasive web of

self-regulatory bodies and codes. Sometimes these guidelines go

even further than even governments would contemplate. This

self-regulation of advertising is, in part, a defence by the

industry against imposed mandatory controls.

The future of self-regulation will depend on the

responsible attitudes of the various advertising agencies and the

effectiveness of the control mechanisms regulating the industry.

There seems to be very few reasons for government intervention in

an industry which performs effectively with the existing

mechanisms.

26.

One way out of the dilemma of self regulation might be

when dealing with recalcitrant groups and/or individuals - to

have the government and consumer groups in consultation with

industry representatives, draw up the regulations and then allow

the industry to continue to implement those regulations.

(G) The Advertising Standards Council (ASC)

The ASC was established in 1974 by the MCA in

association with the AFA and the AANA in order. to provide access

for the public for complaints against offending material as well

as enabling them to be involved in the amendment and/or extension

of various self-regulation codes.

The ASC acts as a complement to the Trade Practices

Commission and various consumer protection bureaux and has the

endorsement of the Federal Government. The council is madeup of

ten members - five from the advertising industry, five from the

general public, and an independent chairman - Sir Richard Kirby.

(H) Government Regulation

The advertising industry is not completely

self-regulated and there is various legislation that affects the

industry. In fact there are 9 Federal Acts, 115 State Acts and

Ordinances representing 41 different categories of legislation

that deal directly with marketing and advertising.

Federal Acts that affect the advertising industry are

the Trade Practices Act, the Broadcasting and Television Act,

Health Act, Copyright Act and the Trades Description Act. In

addition, there are three. Federal statutory authorities directly

involved in general matters concerning the advertising industry.

27.

These are:-

a) Trade Practices Commis sion (TPC)

The TPC deals with anti-competitive matters such as price discriminations, mergers, exclusive dealing and consumer protection.

b) Australian Broadcasting Tribunal (ABT)

The tribunal was set up in 1977 to enforce the Broadcasting and Television Act.

c)Independe nt and Multicultural _ Bro adcasting Corporation 7IMBC^!! __^

The function of the IMBC is to operate

multicultural broadcasting and TV services.

(I) How Much is Spent on Advertising

According to the Commercial Economic Advisory Service of

Australia (B & T Yearbook 1981) in 1979 the total advertising

expenditure in the main media was $1.5 billion. That is

approximately $100 for every man, woman and child living in

Australia. The money spent went to:

Print Media $744 million 50.2% Television $449 million 30.3% Radio $130 million 8.8%

Outdoor $134 million 9.1%

Cinema $ 23 million 1.60'

The top spenders in 1979 by Industry Group were:-Foodstuffs Motor Vehicle & Aceessories Sundries (unspecified) Household Equipment, Furnishings and Appliances

Travel and Tours Building Materials & Industrial Machinery Household Products & Cleansers Women's Toiletries

Finance, Loans, Debentures Liquor Newspapers, Magazines & Books Pharmaceuticals

$89.2 million $74.8 million $58.4 million

$52.5 million $33.9 million

$33.9 million $27.7 million $26.2 million $23.1 million $23.0 million $22.0 million $20.2 million

28.

Smoking Accessories $18.1 million

Government $17.9 million

Records $13.0 million

Confectionery $12.3 million

Insurance $11.0 million

Banks $ 9.1 million

Soft Drinks $ 8.1 million

Pet Food & Pet Cat Products $ 8.0 million

According to the same source (commercial Economic

Advisory Service, Australian Business , 5.11.81) in 1981 the total

advertising expenditure in the main media is estimated to have

been $2 billion, an increase of nearly 43% on 1979. In other

words in 1981 nearly $143 was spent on advertising for every

person living in Australia. The $2 billion was split as follows:

Print Media $974 million 48.7

Television $656 million 32.8%

Radio $172 million 8.6$

Outdoor $166 million 8.3%

Cinema $ 30 million 1.5%

Of the $2. billion spent on advertising, 75% of it is

handled by 20 companies and more than half to just 10 companies.

The Australia Direct Marketing Association estimates

total expenditure on direct mail advertising of $341.9 million in

1979 and $431.9 million in 1981, an increase of 26.3%.

,According to the International Advertising Association,

Australia ranked tenth largest nation in terms of advertising

expenditure in 1979 on a per capita basis and was ahead of West

Germany, the UK, France and Japan.

Australia has a comparatively large amount of TV

advertising. In peak viewing time Australia has 11 minutes of

advertising per hour, USA 9.5 rains/hr and UK 7 mins/hr.

Growth in advertising expenditure has been increasing at

an average of 16 per cent a year for the last 10 years.

29.

(J) Advertising and Information

There are regular complaints from consumer organisations

that advertising is misleading and advertisements lack

information. In fairness to advertisers it should be pointed out

that advertisers only promote the product. Promotions are alwa

endorsed by the executive or the public relations section of the

company trying to sell the product.

Advertisers are rarely consulted before or during a

product's design. They are only presented with the end product

and are asked to make the best of it. And often they do just

that, emphasize the best part of the product.

Therefore the factor that most frequently renders an

advertisement misleading is not the character of the statement

that it contains but rather the information that is omitted.

Consumers feel that they need more factual information

about products than they are given in the advertisment, in order

to make a wise purchasing decision.

Another confusing problem area is standard weights and

measures. Some manufacturers do not use standard weights or

measures. What they do is to state on a "small" box that it

contains 238g of the product, on a "big" box that it contains

488g. and a "super giant" box contains 953g. of the product. The

purchaser trying to make a judgement as to the "best buy" on a

cent-per-gram basis is effectively frustrated.

Similarly, existing regulations and laws do not always

require the manufacturer to state ingredients in an intelligible

way. In fact, contents frequently do not have to be revealed at

all. And when they are it is of little use to the average

30.

consumer that the product

they don't know the sci

important for the average

and informative labels on

of water in a particular

percent of the total.

contains 0.02 mg of ascorbic acid, when

entific name of Vitamin C. It is very

consumer to have simple, understandable

products, or to know whether the amount

food mixture is one percent or fifteen

To expect advertisers to provide such information in

their ads would be somewhat naive mainly because they themselves

are not supplied with the "bad" or "complicated" data regarding a

product. It is the duty of the manufacturers to become more

attunded to the needs and requirements of their consumers. The

need for informative labeling is imperative. Many overseas

countries e.g. U.S.A., Canada etc., already compel manufacturers

to provide such labels. Indeed, in European countries the

content is shown in four different languages. The expense to the

producer in providing more informative labels is negligible. If

one looks at most European products the way they are packaged and

presented, one could hardly argue that the product suffers

esthetically because information is provided in four or five

languages.

It is the job of industry to make things simple so that

they fit the reality of the consumers and not the ego of

engineers. Unfortunately when some manufacturers say that they

have a product of "quality" they use their engineer's definition

which means, something that's very hard to make, and costs a lot

of money. That is not -quality - it is quite often incompetence.

The lack of trust between the advertising industry and

the public is not caused therefore by the slogans, and jingles.

It is due to the fact that the information provided is often

meaningless to the consumer.

31.

7. BUSINESS AND THE CONSUMER MOVEMENT

There is no doubt that some businesses are listening to

the needs of consumers. Appliance makers are starting to write

their warranties in plain English. So do some insurance

companies. Auto makers are trying to get new cars to customers

with all screws tightened and panels fixed, even if there are

still some problems with standard height bumperbars and

weatherstripping. Textile manufacturers are looking more closely

at the clothes their fabrics produce to make sure their fibre is

really suited to the garment and that it does not represent a

fire hazard.

There is a reason why consumer issues have become good

"politics". In the very broadest sense consumerism can be

defined as the failure of what business schools have been

calling the marketing concept. Basically the concept is that the

proper way to run a business is to find out what the consumer

wants and needs. The next step is to work back from customer to

manufacturer and produce a product that fills those needs and

wants, better than any alternative in the market. With efficient

production, good distribution, attractive packaging and effective

promotion the manufacturer should have few troubles.

This system has worked well since the second world war

and it presumed that the consumer is capable of making

"intelligent" choices between product A and B. It presumed that

the better products will survive while the competitor will

disappear from the market. It was a "natural selection" approach

to marketing. It was the fallacy of "pure competition" theory

advocated mainly be economists of the Friedman persuasion. There

are many causes for its failure.

32.

(A) Apathy

The last two decades have seen a major epidemic

devastating the population of the western world; apathy . The

disease has affected mainly two areas of our society politics and

manufacturing industry. A cure has not yet been found but it

might be in the direction of honesty.

Although we have no cure as yet, we can diagnose the

general causes of this apathy.

(a) Product complexity . Few consumers can make an "intelligent"

choice today between the "trinitron"

tube marketed by company "A" and the

"black stripe" tube marketed by company

"B" when they decide to buy a new

television set.

How many people really understand a six

cylinder, air conditioned, power

assisted, fuel injected, electronically

starting autombile which is also

equipped with cruise control, on board

computer, fuel saving guages,-automatic

transmission and even a fridge.

Without a doubt products on the market

have improved and continue to improve.

But a number of questions arise. Does

the consumer understand these

improvements?

If the product has become so complex

that consumers cannot understand them

anymore how could they have wanted that

product in the first place?

33.

Is it a case of the project departments

of companies listening more closely to

their own engineers and designers

rather than the consumers who will

purchase the product?

(b) Business Boom. With the increasing demand for the

latest wizardry of the electronics

industry with ever newer designs in

fashion and even greater pressures for

healthier" or "tastier" foods the

casualty of the quest for quantity is

very often quality.

Unscrupulous businessmen can turn to

kangaroo meat or pet food in order to

satisfy an order for hamburgers.

Fashion designers will purchase cheaper

materials to produce that "lasting

vogue look" which will disappear the

first time the garment is washed.

Indeed there are fewer and -fewer

clothes that can be washed at home.

"Dry clean on ly" has become a trade

mark of many clothes and for those who

do not heed the warning, the solution

lies in the purchase of a new garment.

Convinced that quality and convenience

are forever on the rise, that the

technical genius of industry can work

miracles, that the new, is always

better, and that the computer can solve

anything the consumer expects a lot

that cannot be delivered.

34.

Perhaps consumers never had it so good

as far as quality and the quantity of

products is concerned: But a

"credibility gap" has developed between

industry and the consumer.

Industry and producers have been

boasting about how good their products

are for so many years, that people no

longer believe them.

(c) Unemployment No one really wants to be an auto

mechanic or repairman any more. There

are better and easier jobs in offices

and factories.

Those few mechanics and repairman who

remain are so beset by customers that

they can't really repair anything

anymore. In fact they have become

"replacementmen" and "exchangeman".

A faulty car part, shavers, toasters or

other appliances are not repaired

anymore. The "exchangeman" looks for

the nearest four bolts removes the part

and replaces it with a new one. It's

cheaper they say.

With high unemployment tradesmen can

afford a high "turnover" of

apprentices. If the apprentices don't

like the conditions or the pay they can

be quickly substituted by someone who

will. Because of the high demand for

skilled tradesmen these apprentices

35.

often turn to correspondence courses

and set up their own back yard shops

with dubious consequences to the

unfortunate customer, or they simply

join the unemployment queues.

Industry and indeed our society must

learn the art of re-generating and

re-using products rather than 'simply

generating and producing new ones. A

repaired product can be just as good as

a new one and repairing it can provide

employment for tradesman who are

becoming a dying race.

(d) Alienation The suburban middle class which

constitutes the principal market for

goods and services believes that the

government is not responsive to their

needs, politicians are interested only

in their own survival, taxes are too

high, feminists are too aggressive,

homosexuals too vocal and that there is

worse to come.

The middle class is at its collective

wit's end. And now the last refuge, the

goods and services they buy with their

inflated dollars to support the good

life, seem to have let them down.

The screws on the brand new car are not

tightened, the new television set will

work unless you purchase a $200 antenna

and the exclusive trousers which fitted

perfectly in the shop have to be thrown

out after the first wash.

36.

The consumer movement has a very

fertile ground in this country and

dissatisfaction with consumer goods is

much more widespread than the number of

consumer organisations would indicate.

The membership list of AFCO is

entensive. The readers of "Choice"

magazine run into hundreds of

thousands.

These issues and the general discontent have produced in

Australia a consumer movement which is ever increasing in power

and size. They are no longer concerned only with protecting

consumers against physical harm and outright fraud, they are

fighting now for guaranteed performance, efficacy, and to

regulate the total relationship between buyer and seller. In

legal terms, emphasis has moved from torts to contracts.

Australia is guilty of unworthy behaviour in this

regard. Anvar Fazal the President of the International

Organisation of Consumer Unions, pointed out very clearly when in

Australia this year, several instances of deplorable corporate

practice in this regard. Particularly he suggested, and gave

examples of several products which we export to Third World

Countries which do not pass Australian standards.

A Labor government will require that all products

exported from Australia conform to the same purity, safety and

quality standards which are relevant within Australia. This is

essential if we are to maintain any form of national integrity

and morality with regard to supervision of export products and

quality.

37.

(B) Business Reacts

There are definite signs that businessmen are taking the

consumer movement and consumerism seriously and that they are

addressing themselves to it on a systematic and continuous basis.

In the past the business response to calls by the

consumer movements or government regulation have been fairly

predictable. They often spend more time and money in evading the

issues than addressing themselves to the questions.

Government regulation or consumer complaints are

certainly not new concepts invented by trendies to upset

producers. Industry has learned to cope with health, safety and

import regulations. However any new move towards government

intervention seem to provoke the anger of the industry.

In the struggle over consumer issues businessmen are

often angry and bewildered. But by and large they are not

cynical. They simply cannot understand why all the fuss about a

small screw when their ow •n engineers have assured them that the appliance can operate perfectly even without it. The problem

obviously is one of communication. -

Consumers have no direct input into the production and

design process and producers have no real insight into what the

consumers want or object to. It is not the case of "barking up

the wrong tree" but a case of two dogs barking at two different,

trees.

Businessmen do not mind regulation provided it is

consistent, uniform and long lasting. Industry must be given the

time to adapt to changing conditions and laws. Consumers on the

other hand must learn also that the industry has no interest in

manufacturing faulty or harmful goods. Often it's a question of

oversight which can be solved with an open and frank discussion.

38.

However when problems cannot be solved and there are

some recalcitrant businesses which in spite of repeated calls,

neglect to act on serious breaches, it is the role of the

government to intervene on behalf of consumers in order to

protect their health, safety and interest.

S. WHO IS RESPONSIBLE?

It seems that certain companies wait until they are

forced to change their way of promoting or selling products,

either by government legislation or by consumer pressure. Often

these manufactures and sellers recognise the wrong but accept no

responsibility for it.

Businessmen who reject the concept of social

responsiblity will do so mainly for two reasons; to maximise

profits or because they feel that there has been no clear mandate

from the Australian public to take a specific action.

As for as profits are concerned the negative effects of

bad publicity in the media for irresponsible producers certainly

would minimise the future success of that company in the market

place. Penalties, State government investigations and litigation

with consumers can reduce considerably the gains made through

socially irresponsible selling methods.

As far as the "mandate" from Australian society is

concerned 'companies must understand that if self regulation

becomes ineffective governments will be forced to legislate in

this area.

9. THE OVERSEAS EXPERIENCE

Most member countries of the OECD have by now

established institutions to deal with policy and protection

matters. Until the recent decision to abolish the Department of

39.

Business and Consumer Affairs, Australia was one of the growing

number of countries which had a ministerial or executive post in

this area. The decision to abolish this Department has been a

retrograde step contrary to the current trends in the OECD

countries.

Overseas there is an increasing tendency to involve

consumer organisations in the governmental economic

decision-making process. Thus in the United States the areas of

concern of the Office of Consumer Affairs have been extended to

cover such additional matters as food, housing, energy, credit,

privacy and. telecommunications. In the Netherlands discussions

have been held in an attempt to develop their consumer policy

into a more comprehensive "consumption" policy.

The United States has proposed a system of international

notifications of product safety breaches so that countries may

make informed decisions in relation to the importation of such

goods. Several countries are reviewing their systems of enforced

consumer information with Sweden's concept being a system of

comparative information at the point of sale.

Changes to consumer law must occur as a result of

technological development. Some aspects currently being studied

overseas are the impact of modern credit facilities (e.g. credit

cards, bank cards etc.) on consumer behaviour and the

possibilities of computerised consumer information networks.

After 10 years of co-operation increasingly, the

international consumer movement is perceiving that consumer

organistions throughout the world will have to link their

activities and take joint action to ensure that regulations and

codes of practices are formulated on an international basis in

order to protect the interests of consumers. There is also a

growing awareness that the international consumer movement should

take a stand against unscrupulous practices by multinational

40.

companies - especially the pharmaceutical companies - in the

developing countries which do not enjoy even the most basic level

of consumer protection. Reports are that products which do not

meet quality and safety standards in the West are being dumped on

unwitting consumers in developing countries, jeopardising their

already vulnerable health and welfare.

10. THE "ETHNIC" CONSUMER - A SPECIAL CASE

Most newly arrived migrants and refugees have low

salaries, bad or no previous credit records and an unstable

source of income which often prevents them from buying

merchandise from established or large firms. They are not

eligible for housing loans or credits. These families lack

enough savings to pay cash and they often do not meet the

guarantee requirements of established companies.

To make matters even worse, consumers from a non-English

background gather their information about the price and quality

of alternative goods •or services by word of mouth (from friends),

the not always friendly "colinguals", advertisements, retailers

with a knowledge of foreigh languages, in case of major

transactions (e.g. housing, car loans etc.) from banks and

insurance companies, and sometimes from "multilingual pamphlets"

printed by Government agencies. To say that these "sources of

information" are inadequate, is to express a most serious issue

in mild terms.

It needs to be emphasised that the most direct and most

immediate contact between migrants, refugees and the Australian

community is at the business level. While it is a great step

forward to provide English classes and train non-English speakers

for better paying jobs, such improvements can be nullified when a

migrant and his family enter the market place as consumers. In

the suburbs they are confronted with a shopping situation that

generally offers them higher prices, inferior merchandise, high

pressure selling and hidden and/or inflated interest charges.

41.

Because of language . difficulties, people from a non-English speaking background find it very difficult to

familiarise themselves or to become accustomed to new system, a

strange environment and different surroundings. They are unaware

of the nature of credit contracts, of the legal rights and

obligations of both buyers and sellers, of sources of advice for

consumers and/or the operation of the Courts (e.g. Small Claims

Courts) concerned with these matters.

Some people take an unfair advantage •of their superior

knowledge or familiarity with the law and their expertise in

dealing with contractural relationships. They engage in various

tactics exploiting the ignorance, lack of knowledge and indeed

the lack of English oftheir customers. "High pressure" salesmanship, "bait" advertising, misrepresentation, of prices,

substitution of used goods for promised new ones, failure to

notify consumers of legal actions against them, refusal to repair

or replace substandard goods, and exhorbitant prices or credit

charges are commonplace complaints to consumer organisations, law

courts and the police.

Newly arrived immigrants and refugees, are less mobile

than the general population, and they often buy food from local

groceries. Prices in these small stores are significantly higher than in major supermarkets. Groceries generally are dearer, because they cannot achieve "economies of scale", and

because operating costs are higher in these suburbs.. Their customers, because of a limited amount of money, often buy

smaller sized packages which are more expensive per unit of measure.. In fact, immigrants and refugees are paying higher prices for a lesser amount and often for a poorer quality

merchandise.

Comparative shopping outside these neighborhoods would,

of course provide a demonstration of the disadvantages of trading

with some local merchants. Unfortunately language difficulties,

42.

transportation and time prevents migrants from comparing

merchandise, brands and prices. Strong cultural ties also

encourage residents to forego shopping advantages offered in

other areas. They often choose the small grocery stores

regardless of price, or service simply because the merchant

behind the counter speaks their own language. In fact language

assures many of these stores of a local, regular and captive

market.

People from a non-English speaking background are also

in a weak position in supermarkets and large retail stores, not

only because of the lack of fluency in English, but also because

they are less well educated. According to the National

Population Inquiry (No.), AGPS, Canberra, 1976) 67% of the

Greek, 63% of the Italian, 44% of the Yugoslav compared with 6%

of the British born had no schooling, or schooling only to a

primary level. Lack of information compelled with either a

reluctance or an inability to articulate their questions

explain the immigrants' loyalty to and preference for major brand-names.

Recently the concept of full disclosure of content and

composition is being promoted in Australia as the major means of

offering the consumer additional protection. Little attention is

paid however to a more personal approach to determining whether

the consumer is taking note of these disclosures. This problem

is particularly accentuated in the area of ethnic affairs, where

Government publications (mainly in English), court reports

(exclusively in English), and pamphlets from consumer protection

organisations never reach the ethnic population, ethnic

organisations or the ethnic media. .

(A) Planning for the future

Consumerism in Australia can be improved! But in order

to do so there is a need for closer consultation between

43.

Government agencies, producers and most important the consumers

themselves. Consumers receive very little information today and

their awareness of consumer issues is based mainly on Government

pamphlets, or magazines published by voluntary consumer

protection organisations (e.g. Choice) and other leaflets which

are confined largely to the English speaking, well educated

middle class.

Clearly a different approach or at least a greater

effort is needed, as far as ethnic consumers are concerned.

Basically there are two avenues that we should consider.

A) A short term approach and B) long term policies.

A) By short term approach are intended things that we can

do right now without any major expense or the need for

legislative machinery. For example:

1. We could provide labels in at least the four major

community languages (Italian, Greek, Slavonic and

Arabic) in areas such as:

a) pharmaceuticals and medicinals

b) poisonous substances

c) instructions for preparation of food

d) expiry dates

e) reminders and warning of content

f) warnings of flamable substances and petroleum

products

g) warnings of explosives (in building industries) and

other products.

h) mixing of chemical compounds

i) mixing of alcohol with medications.

2. Warnings and instructions in facatories and on machines.

44.

3. Multilingual road signs and directories.

4. Signs, warnings and direction at airports, especially

considering the large number of tourists arriving in

Australia.

5. Signs, directions and a better utilization of bilingual

staff in our hospitals.

6. Provision of interpreters and bilingual staff in areas

frequently used by the public.

7. Provision of interpreters and bilingual staff at Police

departments.

8. Provision of interpreting facilities in law courts and

for lawyers and/or solicitors.

9. Translation (by professional interpreters) of existing

and newly published information regarding social

security, health and other areas of concern into the

major community languages.

These are services and facilities that can be provided

right now without any major expense and their success depends

only on the good will of administrators, businessman and the

general public.

B) Long term policies should include:

1. Introduction of consumer education in high schools,

colleges and universities.

2. Effective safeguards against labels and warnings

becoming too technical to be of interest or help to the

consumer.

45.

3. Provision of a monthly report to consumers in English

and in other community languages, initially made

available to consumer (complaint or) information offices'

and the media as an effective mechanism for denoting the

existence of hazardous products, excessive claims,

questionable representation etc. This report could

detail information of particular interest to the ethnic

communities and consumers e.g. questionable practices

under investigation, etc. which could be also broadcast

on ethnic television. This report should be seen as a

communication device, designed to ensure that consumers

take more note of the available information, something

they would do if this information emanated from an

authorative Government source.

4. Fostering of greater awareness by the media of the

specific needs and difficulties faced by newcomers in

this country in order to prevent libelous reporting and

stereotypes such as "Greek Dole Cheats" or "Italian

Marihuana Growers" etc.

5. Simplification of insurance policies (e.g. NRMA "Plain

Language Policies") made also available in a number of

community languages.

6. Contracts (e.g. housing) written in .a language

understandable by "lay" persons and translated in a

number of languages.

7. Wider publicity of the consumer's rights.

8. Wider publicity of the businessmen's obligations.

I am not arguing that a Labor Government would

immediately insntitute all these policies at once.

46.

However, I do believe that these are some of the minimum

requirements to facilitate a speadier settlement of non-English

speaking prople in our community. Immigrants and refugees do

have special and specialised needs beyond and above the general

policies framed for the rest of the population.

47.

11. BIBLIOGRPAHY, REFERENCES AND OTHER SOURCES

For ease of reading footnotes, authors or any specific reference to various materials have been ommitted from the text. The following is a comprehensive list of publications which have been used to compile this paper.

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Exploitation of Disadvantaged Consumers by Retail Merchants . National Advisory Commission on Civil Disorders. report, p.p. 139-141, Washington GPO 1968.

48.

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Brown J.J., Speech to the Australian Federation of Consumer Organisations. Annual General Meeting, Canberra, 1 November 1981.

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49.

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