Stephen Cenatiempo:
Time to talk federal politics with the Assistant Minister for Productivity, Competition, Charities and Treasury and the Member for Fenner, Andrew Leigh. Andrew, good morning.
Andrew Leigh:
Good morning Stephen, great to be with you.
Cenatiempo:
I was thinking about you this morning because we’re starting to get some hot weather. How do you go with your running in this kind of heat?
Leigh:
So, the best thing about Canberra, Stephen is that even on the hottest days, it’s cool in the morning. So, a morning run in Canberra is always fantastic. But I do take my hat off to those who run at midday through summer. That’s next level.
Cenatiempo:
Yeah and it may be a little bit mad too. Now, you’ve talked recently in the last couple of days about stopping unfair trading traps around subscriptions. What are you talking – what sort of subscriptions are we talking about here?
Leigh:
Well Stephen, all kinds of subscriptions are useful in people’s lives. People might be subscribed to a gym, they might subscribe to a streaming service, but in many cases people have found that getting out of a subscription is harder than getting in. It’s the kind of Hotel California problem; you can check out but you can never leave. Some of these firms are asking people to phone up if they want to cancel an online subscription, others have a sort of what they call ‘confirmshaming’ process where the ‘click to cancel’ button is small and the ‘stay’ button is big. So we’re saying very clearly to firms that if you offer a subscription, it should be as easy to cancel as it was to start, and if it’s not you’ll be in breach of the competition law.
Cenatiempo:
How far do you extend this? Because I had an experience recently with my private health insurance. I can go on and upgrade my subscription or my plan any time I like, but I can’t downgrade it. Then I’ve got to go through the rigmarole of trying to ring somebody and you can never get through, and one of the operators once said to me, ‘We will never put on our websites the ability for you to downgrade your subscription, only go the other way’.
Leigh:
Well, it sounds dodgy to me. What the ban will do is it will put in place a general ban on unfair trading practices and then it will single out 2 specific practices: subscription traps and drip pricing. But if this was considered by the courts to be an unfair trading practice, then it would also be against the law.
Cenatiempo:
How do you manage overseas providers? Because a lot of the subscriptions we would sign up to these days are actually foreign companies, not necessarily Australian‑domiciled organisations?
Leigh:
Well, just because your headquarters is based overseas doesn’t mean you get out of complying with Australian law. So companies like Amazon, Netflix and Apple all have to comply by Australian law. And I’ve got to say Stephen, Apple is actually pretty good when it comes to subscriptions. A monthly email telling you when they’re taking money out of your credit card and one place on your iPhone where you can cancel any of your subscriptions. That seems to me a useful model for other companies to follow. Our government will have other issues with Apple’s practices, but on subscriptions, they’re pretty good.
Cenatiempo:
I imagine at the top of mind would be gym subscriptions for most people here.
Leigh:
Yeah. I mean, we’ve certainly heard practices where your gym subscription can start within a couple of minutes, but if you want to stop it you’ve got to wait a month. That seems pretty questionable to me. Ultimately, these questions will be litigated in the courts, but gyms will certainly be within the ambit of our unfair trading practices reforms.
Cenatiempo:
What about – because one of the ways that a lot of these companies seem to get you is they’ll charge you a monthly or a weekly or a fortnightly fee, but on a 12 month or even sometimes a 36 month subscription, and you say you want to cancel and they go, ‘Well sorry, your subscription goes right through till next September and you’ll have to ring us back then’, is that kind of thing going to get caught up in this too?
Leigh:
It’ll depend on whether it’s unfair to customers. Certainly, we’ve seen instances in which there are so‑called free trials which turn out not to be free and which people are duped into taking a full subscription. So each case is going to turn on its facts, but the era of pulling the wool over consumers’ eyes in subscriptions is over. Alongside our ban on drip pricing, we’re going to be getting rid of subscription traps.
Cenatiempo:
How is this going to be administered though? Because fair trading is generally a state or territory function, how do you work with the states and territories to make sure this is enforced?
Leigh:
Great question. We’ve got together with state and territory ministers in Canberra, and one of the things we agreed on was that they would all go ahead with unfair trading practices, which means that those state and territory consumer regulators will also be enforcing these laws. This has been an issue that states and territories have raised as well, so it’ll be a joint effort in terms of cracking down on it.
I’ve got to say Stephen, we’re also cracking down on drip pricing, which is this process where if you’re buying a concert ticket, suddenly you see these fees added at the end of the transaction. If there’s an unavoidable fee, it will have to be built into the price that’s offered upfront. You won’t be able to get around your competitors by pretending to offer a low price, when in fact the product costs a higher price.
Cenatiempo:
Yeah, and I’d say that should be extended. I know there’s been some work talked about when it comes to credit card fees and tap and go fees at retailers, but unfortunately it’s the retailers who seem to be copping the brunt of that, not the banks who are actually charging these fees.
Leigh:
We’re trying to cut down on those fees, but we want to make sure we don’t hurt small businesses. So, one of the things we did last year was to ban debit card surcharging, but we’ve engaged in a consultation on credit card surcharging so we can do the right thing by consumers and small businesses.
Cenatiempo:
Yeah, but the debit card – but that’s my point, the debit card surcharges are actually being charged by the banks, so the small business is only just passing on a cost, aren’t they?
Leigh:
In the case of debit card surcharging it seems that that was very little cost involved, which is why we banned them. In the case of credit card surcharging, there is a pass‑on there, and that’s why we’re working with small business and Daniel Mulino’s engaging on that reform.
Cenatiempo:
You might need to talk to some small businesses because there are a lot around Canberra that are still charging these. But I want to touch on one other thing before I let you go. You tried to defend this policy and I credit you for sticking up for your side, but we’ve had a bit of an influx of common sense, and the government has now abandoned this attempt to put a time limit on military decorations. I think we got to the right answer at the end.
Leigh:
Yeah look, I know you’ve had conversations there with Darren Chester around that, as a keen listener of your program. Stephen, it is our view that we didn’t want this to become a distraction from other more important things like environment laws this week when it was clear that the Coalition were going to play politics with it, so we decided to put this one on the back‑burner.
Cenatiempo:
Andrew, good to talk to you. We’ll catch up with you in a fortnight’s time.
Leigh:
Likewise. Thanks Stephen.
Cenatiempo:
All the best. Andrew Leigh, the Assistant Minister for Productivity, Competition, Charities and Treasury and the Member for Fenner.