Minister for Competition Policy & Consumer Affairs, Chris Bowen has today unveiled draft legislation that will ensure consumers know the total price they will have to pay for goods and services that they buy.
The amendments to the Trade Practices Act 1974 will address the use of component pricing in advertising to consumers. Component pricing is the practice of advertising prices as the sum of separate components, for example, advertising an airfare as $100 plus $48 tax, fees and charges.
"This is good news for consumers," Mr. Bowen said.
"No longer will consumers feel ripped off when they suddenly discover that what they thought they were paying doesn't take into account hidden taxes and charges.
"These reforms will mean that consumers will know the total price they will have to pay for goods and services that they buy.
"Without this information, consumers cannot easily compare prices and so it makes it even more difficult for consumers to shop around.
"The Rudd Labor Government is serious about empowering consumers and strengthening the consumer's right to know the total price of a good or service.
"We are taking on reform in an area where the previous government acknowledged there was a problem and talked about changes but never got around to doing anything about it."
The legislation will require that, where a business advertises the price of a good or service to consumers, it must display as a single figure, the total price of the product, to the extent that it is quantifiable at the time of making the representation.
The Minister has reviewed the previous government's draft legislation and has made some key changes, including:
- removing postage and handling charges from the scope of the changes;
- the amendments will not apply to the Australian Securities and Investments Commission Act 2001 meaning that financial services are exempt;
- clarifying that the changes will only apply to business to consumer transactions.
"The government is not interested in placing an undue burden on business or trying to fix a problem that doesn't exist," Mr Bowen said.
"These changes are sensible and achieve a commonsense balance between addressing the concern of consumers who quite rightly want to know what they are paying before they buy a product or service without placing an unnecessary burden on business.
"The vast bulk of complaints over component pricing practices relate to taxes, hidden levies, and other fees, not postage and handling.
"Financial services are covered by the financial disclosure provision of the Corporations Act and do not lend themselves to this style of change."
Business will not be prevented from using component pricing, provided that the total price is also displayed prominently as a single figure.
Copies of the draft Bill and Explanatory Memorandum are available on the Treasury website at www.treasury.gov.au.
30 March 2008
Media Contact - James Cullen 0409 719 879