The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Chris Pearce

Chris Pearce

Parliamentary Secretary to the Treasurer

26 October 2004 - 3 December 2007

Speech of 15/06/2005


15 JUNE 2005

Good morning and thank you for the opportunity to be here to speak with you today.

The US federal regulator, Mozelle Thompson, who I am sure you are aware of, once introduced himself to a conference of consumer groups with these immortal words:

“I’m a commissioner of the Federal Trade Commission, and I’m here to help you.”

Well, I’m from the government, but, at a forum like this, I believe we all have the chance to help each other. And to learn from one another.

I think the Consumers’ Federation of Australia deserves to be congratulated for putting together and presenting such a valuable and worthwhile program as this.

You know, when I was appointed Parliamentary Secretary to the Treasurer late last year, I was absolutely delighted – because it meant that I would have responsibility for consumer affairs — and consumer affairs is something I am extremely enthusiastic about.

And I was delighted because I know that the Commonwealth can provide strong, effective and appropriate leadership in consumer affairs.

Be assured, my state and territory counterparts in the Ministerial Council on Consumer Affairs, and the Commonwealth, are all working together very effectively to achieve sound, nationally consistent results for the benefit of all people right across Australia.

The Howard Government’s top priority is to focus on solutions that will boost the confidence of Australian consumers.

It is impossible to overstate the importance of consumer confidence to a nation’s economy. In fact, Mozelle Thompson, the United States Federal Trade Commissioner I referred to a minute ago, knew exactly how important consumer confidence is. He explained it like this:

    QUOTE It has been said that consumer spending represents 80 per cent of the American economy. In France, it is 50 per cent and other European countries fall somewhere in between.

    A small change in consumer confidence, up or down, can have a significant impact on a country's economy.

    As a result, government and businesses alike are focusing on the importance of consumer spending and consumer confidence in maintaining economic health and stimulating future economic growth. ENDQUOTE

As you will recognise and understand, exactly the same thing applies here in Australia.

Ladies and gentlemen, the way I see it, the future direction for Australian consumers must be based on two important principles.

Number one – we have to ensure that real benefits flow to Australian consumers from a competitive market,

And, two – we have to understand the vital role that confident consumers play in actually making the benefits of competition real and tangible.

The Howard Government has consistently worked to strengthen the culture of competition amongst Australian business.

For example, as recently as last month in an address to the National Small Business Summit the Prime Minister said:

    QUOTE Competition has brought great benefits to the Australian economy. Some people complain about competition, some people in business don’t like competition, but if you really believe in the free enterprise system you will always place a very high premium on maintaining and expanding opportunity and expanding competition. ENDQUOTE

Today’s competitive markets are the result of decades of sustained microeconomic reform by successive Australian Governments, working in partnership with their state and territory counterparts.

These reform efforts have helped to open up the marketplace and make it more competitive in supplying goods and services to all Australians.

Competition helps business to become more productive – but, most importantly, competition directly benefits consumers.

When businesses are competing with each other, they provide customers with the widest possible range of safe, high-quality products, at the most attractive prices.

It’s a great point to be at: Lots of choice, Safe, High quality, Great prices.

But what’s the driver that gets us to that very desirable situation?

I believe the driver is consumer confidence.

Because confident consumers have the skills and information to choose the goods and services that best meet their needs.

Confident consumers know they have real power – the power of choice. And they know how to use that power.

And when confident consumers use the power of choice, they may not realise it, but what they’re actually doing is forcing business to compete, to innovate and to continually refine and renew their approach to doing business.

And that, in turn, improves the quality and variety of products and services — and reduces the prices.

Confident consumers are smart. They’re savvy.

I believe that they are more willing to participate in the marketplace.

Because, as confident consumers, they know they are protected by the law, and that they have avenues for redress if things go wrong.

But we also need to recognise that consumer confidence can be a fragile thing.

Australian are now being asked to make ever-more complicated choices amongst competing product and services.

But while the complexity of the market may be relatively new, there are some things that never seem to change.

I am referring to the scams and other forms of dishonest behaviour which have — unfortunately — always been with us.

Of course, there are other cases in which suppliers may not behave dishonestly, but may fail to take due care and fail to ensure the quality and safety of their products.

Those sort of challenges to consumer confidence are why – more than ever - we need a strong, relevant and robust consumer policy framework in Australia.

Thoughts on regulation

It is worth making a few points about regulation.

I am on the record as saying that I believe in an open, competitive, free-enterprise economy.

I am opposed to over-regulation, because I am well aware of the dangers it presents.

Heavy-handed or inappropriate regulation can undermine competition by imposing unnecessary compliance costs on business. It can also create barriers to trade in consumer products.

I am committed to developing regulation that is based on robust evidence – and regulation which is designed to address a clearly identified issue.

In essence, this approach ensures that the Australian Government will not regulate unnecessarily.

We will continue to seek self regulatory and co-regulatory solutions to problems — where these promise to be effective and meaningful.

We will, of course, regulate when other proven options have failed to solve immediate issues or address new concerns.

Importantly, we will not hesitate to regulate in situations where the impact on consumer welfare is unacceptable.


Now let’s consider Australia’s overall consumer policy framework.

I think our country has a well-developed framework which, generally, has stood the test of time.

The framework is a shared undertaking between governments, business and consumers.

The framework has four key cornerstones:

  • government regulation
  • industry self-regulation
  • co-regulation, and
  • consumer education

The framework is underpinned, at the Commonwealth level, by the Trade Practices Act or more commonly known as the TPA.

The TPA was developed to enhance the welfare of Australians by promoting competition and fair trading, and by providing for consumer protection.

Despite the evolving nature of the TPA, that objective is as important today as it was when the Act came into effect over 30 years ago.

Together with the Australian Securities and Investments Commission Act, the consumer protection provisions of the TPA prohibit corporations from engaging in unfair trading practices.

The consumer protection laws also imply important conditions and warranties into consumer contracts. In addition, they allow the Australian Government to respond to unsafe products that have reached the marketplace.

Limitations on the powers of the Commonwealth under the Australian Constitution mean that the TPA ordinarily applies only to corporations, and to businesses engaged in interstate trade or commerce, or operating in one of the territories.

To ensure that consumer protection laws apply to all Australian businesses, each state and territory has fair trading legislation which contains consumer protection provisions similar to those in the TPA.

This shared responsibility means that both jurisdictions need to work together closely.

We must co-operate to achieve nationally consistent results for the benefit of consumers throughout Australia.

As the current Chair of the Ministerial Council on Consumer Affairs, I have undertaken to provide leadership in delivering these results.

I will work in partnership with my Ministerial colleagues in the Council to ensure that the Council and its supporting bodies deliver swift, appropriate and consistent results for consumers and business.

In particular, I am committed to providing leadership to ensure that the work of the Council focuses on issues of national significance.

And, most importantly, this close national co-operation will help us to ensure that Australia’s consumer policy framework remains relevant in an ever-changing and dynamic environment.

Review of Australia’s consumer product safety system

You will recall I mentioned earlier that Australia’s consumer policy framework has generally stood the test of time.

But, as the marketplace becomes ever more complex, there is an ongoing need to ensure that our framework can and will keep pace.

To that end, the Australian Government has been working on several fronts to ensure that the framework does remain relevant.

One example of the work we are doing is the current review of Australia’s consumer product safety system.

Like the overall consumer policy framework, our consumer product safety system is well-established – but, like most things, it also has to adapt to meet new challenges.

Consumers can now easily buy products sourced from around the world.

Advances in technology and design mean that new and innovative products are constantly being brought onto the market.

Over time, inconsistencies have developed in the product safety legislation operating throughout Australia, and in the way these laws are administered and enforced.

To meet these challenges, the Howard Government is working with the states and territories to reform Australia’s consumer product safety system.

Currently, we are leading a review, under the auspices of the Ministerial Council on Consumer Affairs, into the operation of the product safety system.

The review has sought public comment on a range of reform options.

One important objective of the review is to promote greater harmony and national consistency in our product safety laws.

We are also looking at how we can enable the consumer product safety system to better detect and assess the safety hazards consumers sometimes face.

And we are looking at how we can enhance product safety research and information.

The reform options reflect the shared responsibility of governments, business and consumers for product safety.

They also recognise the effect of government regulation on trade in consumer products, and on the broader welfare of Australians.

The Productivity Commission is currently considering the possible impact of the reform options, and is scheduled to produce a final report by January 2006. A draft report is expected in the second-half of this year.

At the same time, the Australian Government and state and territory governments are developing some reform options in respect to their own jurisdiction.

Commonwealth Consumer Affairs Advisory Council

I am committed to strengthening the Australian Government’s consumer advisory body, which is known as the Commonwealth Consumer Affairs Advisory Council.

As I am sure you would appreciate, we cannot develop an effective policy framework in order to build the confidence of Australian consumers without active consultation.

To that end, theCommonwealth Consumer Affairs Advisory Council provides the Australian Government with independent advice on current and emerging issues which affect consumers.

The Council also considers and investigates issues referred to it by the Australian Government.

Recently, Iexpanded the work of the Council to include the provision of advice to the Australian Government on consumer use of e-commerce.

This advice was previously provided by the Australian Government’s Expert Group on Electronic Commerce. However, now that many Australians use the Internet to shop, make payments and access financial services, e-commerce has become a mainstream, or, if you like, an everyday customer experience.

This means that the Commonwealth Consumer Affairs Advisory Council is now best placed to advise the Government on issues relating to e-commerce.

To help with this, four members of the former Expert Groupon Electronic Commerce have accepted my invitation to serve on the Council.

Financial Literacy Foundation

Ladies and gentlemen, every year, Australians spend $29 billion on financial and insurance services.

All consumers need to make financial decisions about budgeting, saving or investing. Therefore it is vital to ensure that they are well informed about their financial choices.

This is why the Australian Government has established the Financial Literacy Foundationtohelp all Australians increase their financial knowledge.

The Foundation aims to make it easier for people to understand their options, and the choices that they can make in using and managing their money.

The Foundation will advance a national strategy.

That strategy will include an Australia-wide information and awareness-raising campaign, as well as a one-stop website which will serve as a portal for financial literacy education and information resources.

The Foundation will foster the development offinancial literacy programmes in schools and workplaces.

It will be supported byoriginal research to increase our awareness and understanding of the things that influence community attitudes to financial literacy. And the research will be used to discover the best ways to extend and measure financial literacy.

Consumer information

Earlier, I referred to the vital role that confident consumers play in our nation’s economy.

One of the ways we can enhance consumer confidence is by helping them to obtain sound and timely information.

As you are aware, the Australian Government has a longstanding consumer information programme.

The Treasury, the ACCC and ASIC have developed many useful consumer information products.

Last year, the Australian Government revamped its ConsumersOnline website.

ConsumersOnline is the Australian Government’s one-stop-shop for consumer information.

The revamped website has a lot of new content, including key publications such as “The Australian Consumer Handbook”… information on how to make a complaint… consumer rights when shopping… banking and finance… computers and the internet… product recalls and product safety… and shopping online.

Consumers also benefit from ASIC’s website, FIDO.

FIDO provides information about different financial products… financial tips and safety checks… as well as the latest financial news for consumers.

To ensure that the provision of information is as effective as possible, the Australian Government has consolidated its general consumer information programme.

The ACCC now has primary responsibility for providing information on general consumer matters, while ASIC will continue to provide information directed at consumers of financial services.

Appropriate penalties

Let’s turn to the area of appropriate penalties.

Australia’s consumer laws cannot be truly effective without appropriate penalties for those who break them.

Currently, a serious contravention of the consumer protection provisions of the TPA, and state and territory fair trading legislation, may attract criminal penalties.

The ACCC has indicated to the Australian Government that it does not consider that the existing criminal penalties are effective indeterring or penalising breaches of our consumer laws.

State and territory regulators have also voiced these concerns.

We are responding to these concerns bychairing a review, under the auspices of the Ministerial Council on Consumer Affairs, into thepenalties available for breaches of Australia’s consumer protection legislation.

In particular, the review is considering whether pecuniary penalties, a type of civil fine, would be an effective means of responding to the regulators’ concerns.

Cross-border consumer issues

There is also an important international aspect to enforcing consumer laws.

Increasingly, Australians are buying products directly from overseas suppliers. This allows them to take advantage of a wider range of products at competitive prices.

But, unfortunately, it also means that they may be exposed to scams and other fraudulent and deceptive practices perpetrated from beyond Australia’s borders.

To meet that challenge, the Australian Government agreed, in June 2003, to adopt the OECD Guidelines for Protecting Consumers from Fraudulent and Deceptive Commercial Practices Across Borders.

The OECD Guidelines recommend that OECD member countries work to develop a framework for closer, faster and more efficient cooperation between their consumer protection enforcement agencies.

Australia has a strong and well-developed consumer protection system, which complies well with the OECD Guidelines.

However, the Australian Government is currently conducting a review to ensure that our consumer protection enforcement agencies can cooperate most effectively with their overseas counterparts.

And also that our enforcement agencies can best protect overseas consumers against unfair trading practices of businesses in Australia.

As part of this process, we will consider whether we need to amend Australia’s regulatory framework, particularly in the area of information sharing, to ensure that Australia continues to comply with the OECD Guidelines.

Further research

Developing appropriate policy relevant to the emerging challenges which face consumers is an important goal.

That’s why I am keen to see further research carried out to ensure that Australians benefit from world’s best practice consumer policy.

This will ensure that Australia’s consumer policy framework meets the needs of both consumers and business.

Launch of Principles for the Appointment of Consumer Representatives

As I mentioned earlier, it’s vital that governments actively involve consumers in the development of policy.

I also mentioned the excellent work that theCommonwealth Consumer Affairs Advisory Council does in providing the Australian Government with independent advice on consumer issues.

As part of that role, the Council has produced guidelines to help government and industry bodies appoint appropriate consumer representatives.

Today, I am delighted to launch the final version of a publication titled - Principles for the Appointment of Consumer Representatives: A Process for Governments and Industry.

The document in its draft form has been used by a number of external dispute resolution bodies to guide their appointment processes.

I understand that many other consumer and government organisations have asked the Commonwealth Consumer Affairs Advisory Council for copies of the guidelines.

As stakeholders are clearly using the guidelines, I thought it was appropriate to release, officially, the final version.

I commend this document to you. The principles it sets out aren’t mandatory - but when they are used with flexibility and commonsense, they should help government and industry to appoint effective consumer representatives.


Ladies and gentlemen my position on consumer affairs is crystal clear and unequivocal.

You have my commitment to work towards building a more successful consumer policy framework.

You have my commitment to ensure that consumers are confident that the laws designed to protect them are effectively enforced when necessary.

We need a co-ordinated national approach to consumer policy if we are to deliver the best results for all Australians.

Therefore, you have my commitment to work with my state and territory counterparts to deliver consistent, timely and meaningful results.

Going back to the point I made at the very beginning.

I look forward to working with all stakeholders - consumers, business and their representatives to build and to reinforce the confidence of Australian consumers.

To quote Mozelle Thompson again, consumer confidence is so very important because consumer spending represents such a large part of what makes the economic engine turn of our country. Thank you.