12 March 2009

Fair markets for confident consumers: Delivering an Australian Consumer Law


Keynote Address to the National Consumer Congress, Hyatt Regency Hotel, Adelaide

Thanks to my colleague Gail Gago and the Office of Consumer and Business Affairs for hosting this National Consumer Congress and for all of the work that they have done in organising this event.

Today and tomorrow represents the premier opportunity for all of those involved in, and concerned with, consumer affairs in Australia, to meet and debate the major consumer issues of the day.

I would have liked to have stayed longer, but unfortunately today is a Federal Parliamentary sitting day, and I've been lucky to have been granted a leave pass. Although I must return in plenty of time for Question Time. I'd be happy to take some questions at the end of my remarks.

This is my second address to this Congress and a lot has happened in the past 12 months. As well as using this opportunity to take stock of some of the achievements over the last 12 months, I'll talk in some more detail about the current developments in consumer policy.

An Australian Consumer Law

Perhaps the most significant development since we met in Perth last year has been the agreement reached between the Commonwealth and the States and Territories to have one national consumer affairs law.

As I recently remarked, there were some who have been involved in consumer affairs, who had reluctantly come to the conclusion that they would never see this in their lifetime.

In March last year, as I addressed the Congress in Perth, we were still two months away from receiving the Productivity Commission's final report into Australia's Consumer Policy Framework.

And as I outlined in Melbourne a few weeks ago, the Commonwealth will be fast-tracking key elements of the new Australian Consumer Law – including an unfair contract terms provision – so that we have legislation in the Parliament in the first half of this year.

The year past has indeed been a rapid year on the consumer policy front – receiving the PC's report in May, agreement on the national consumer law at the Ministerial Council in August, sign-off by COAG in October, and now planning the first legislative instalment for June this year.

Recently, I also released a paper – which represents a great deal of effective collaboration between the Commonwealth, States and Territories – outlining the new consumer law environment.

At this point, I also want to pay tribute to the efforts of my state and territory colleagues – including Gail – whose desire to work cooperatively has meant that these reforms are, after many years, about to become a reality.

These reforms were agreed by COAG in October 2008, and represent the most significant overhaul to Australia's consumer laws in 25 years.

The core of these reforms is the introduction of an Australian Consumer Law: a nationally consistent law based on the existing provisions of the Trade Practices Act. This consistency will of course, provide very substantial compliance cost savings to business.

For the first time, all Australian businesses – whether they operate in just one town, or across the entire nation – will have one set of consumer protection laws to comply with.

This law will create a fair and certain market nationally, and allow consumers to have confidence that they can call on the same protections wherever they are, in their dealings with every Australian business.

For the first time, all Australians will enjoy the same basic consumer protections wherever they live and wherever they shop.

And, for the first time, all Australian consumer regulators – the ACCC, ASIC and each of the state and territory bodies – will have common enforcement powers. They will take effective, consistent action at the local, state or national levels to protect consumers.

We are also moving to ensure that consumers are aware of their new rights. I've been concerned for some time that the Trade Practices Act is inaccessible - that the majority of consumers are unaware of the role it plays in protecting their rights. The very term 'Trade Practices Act' is a tad anachronistic.

Accordingly, I have flagged our intention to change its name to the 'Competition and Consumer Act', so that consumers are clearer about which law provides them with their rights and responsibilities in their dealings with business.

Key elements of the new law

We've also taken the view that getting a more consistent national law is one thing, but that we should also take the opportunity to substantially strengthen the consumer protection provisions, as part as this process.

Unfair contract terms

Importantly, the Australian Consumer Law will introduce a national unfair contract terms provision.

I view unfair contract terms as those which create a significant imbalance in the rights and obligations of the parties under the contract. And, are not reasonably necessary to protect the legitimate interests of the supplier.

The law will apply to standard form contracts.

Remedies will apply where a person demonstrates that such a term causes detriment – or that there is a significant likelihood that detriment will occur.

It will take into account all the circumstances of the contract to ensure that consumers get a fair deal.

Unfair contract terms regulation, a concept pioneered in Australia by Victoria, will make contracts fairer and give consumers throughout Australia more confidence in their choices. Could I take this opportunity to again publicly thank The Victorian Minister Tony Robinson and the head of Consumer Affairs Victoria, Claire Noone for their professional and constructive assistance in developing the National Unfair Contracts Regime.

Penalties, enforcement powers and redress

I'm very pleased that the Australian Consumer Law will introduce a range of new penalties, enforcement powers and redress options to be applied nationally and in each State and Territory.

Civil pecuniary penalties and disqualification orders will proportionately punish those businesses that break the consumer law. Substantiation notices, infringement notices and public warning powers will give regulators the teeth they need to enforce the law & notify the public of concerns. And, redress will be available to consumers without always having to be a party to court proceedings.

This of course, represents a significant improvement to the enforcement powers of the ACCC and I believe it is important that they have these powers ASAP – hence the need for fast-tracked legislation by June.

For too long the ACCC has been attempting to protect the interests of consumers with one hand tied behind its back.

For too long, State and Territory enforcement agencies have had powers the ACCC lacked. I'm glad that by years end, this will no longer be the case.

I know that Peter Kell, Deputy Chair of the ACCC will also be speaking later this morning on the future enforcement of our new national consumer laws.

Best Practice reforms

In committing to a national consumer law, COAG also agreed that – where the provisions of the Trade Practices Act are not adequate do deal with an issue – we will augment them with reforms based on best practice in existing State and Territory consumer laws. A range of options in this category of reforms is canvassed in the consultation paper, and I encourage you to give us the benefit of your views on those approaches. I am keen to ensure that the Australian Consumer Law reflects best practice, and to draw on the valuable work of the States and Territories in this area over the years.


Conditions and warranties review

As a part of this process, I am please to announce today a review of our current laws on implied conditions and warranties by the Commonwealth Consumer Affairs Advisory Council – CCAAC - to feed into the development process for the new law.

For too long, consumers have been denied the full benefit of statutory conditions and warranties due to a lack of understanding about their rights in consumer transactions. In some cases, businesses have taken advantage of this to attempt to deny consumers of their rights or to sell them protections that in many cases the law already offers. The ACCC has closely examined some of the extended warranties that have been on offer and found that they offer customers potentially less than they received automatically at no additional cost under their statutory rights.

CCAAC will review the adequacy of existing laws on conditions and warranties around the country and – drawing on best practice in Australia and overseas – propose enhancements where necessary.

The Council will also:

  • examine whether there is need for 'lemon laws' to protect consumers who purchase goods that repeatedly fail to meet performance standards, specifically in relation to motor vehicles; and
  • Bearing in mind the costs and benefits of such an approach, take a closer look at the issues around the sale of extended warranties.

The ACCC has found that 80 per cent of consumers who reported problems with warranty conditions on their goods were unaware they had consumer or statutory rights implied in the sales contract.

So it is timely and appropriate that the Commonwealth does review statutory warranties and conditions – after all, is there anything so essential and fundamental in a fair marketplace, than the consumer being able to rely upon basic warranty and conditions when purchasing their goods?

Time lines for the new reforms

I have already announced that the Commonwealth – for its part – will be fast-tracking key elements of the Australian Consumer Law.

This means that at the national level, the new laws on unfair contract terms, penalties, enforcement powers and redress will be in force at the beginning of 2010. I will introduce a Bill into the Australian Parliament by the middle of this year to do this.

The entire package of reforms will be in force – at the national, state and territory levels – by the beginning of 2011.

There is much to do, and Treasury is working closely with their State and Territory colleagues to progress the changes.

We will be consulting with consumer groups and business stakeholders throughout this process, to ensure that we have a 'best practice' Australian Consumer Law.

To this end, I would again urge you to give your views by 17 March 2009 on the issues raised in the information and consultation paper.

Of course, the developments I've just outlined are the latest developments in what has been an activist year in consumer policy.

Other Australian Government reforms

These reforms of course build on other step we've taken during the year.

Price transparency is essential to the fair operation of markets, whether buying a loaf of bread, or booking a relaxing summer holiday. The Government wants to ensure that consumers are presented with effective and useful pricing information to make sure they are confident and get the best value for money.

Clarity in pricing

Late in 2008 the Rudd Government introduced Clarity in Pricing legislation making markets fairer for consumers by ensuring that they can be confident that the price that they are being asked to pay is the price that they will pay.

From 25 May this year, businesses will be required to state the total minimum quantifiable price of goods or services whenever they make a price representation to consumers. This will include price representations on a newspaper advertisement, catalogue or television 'infomercial'.

Unit pricing

We're also making the grocery market fairer – through introducing a new, national unit pricing scheme, which will take effect on 1 December this year. A number of you have been campaigning on this for many years.

I will shortly be releasing a draft of the unit pricing code and will be keen to hear from both the consumer movement and industry stakeholders as we move through some of the detailed issues of the code. There will be a formal conference for key stakeholders representing both supermarkets and consumer groups to go through the fine details of the Draft Code, & I look forward to your input.

This reform will let consumers make effective choices on grocery items, which a significant amount of our income is spent on every week. Unit pricing labelling is a simple way to deliver key pricing information to consumers and provide greater transparency in prices.

This is especially important in these tougher economic times. It also reduces information asymmetry and empowers consumers to make more informed choices.

Unit pricing is already found in some Australian supermarkets and following the introduction of the scheme, it will be available in all large grocery retailers.

The scheme will make the grocery market fairer for consumers by giving them the information they need to make confident, informed choices.


Competition Policy

Before concluding, I'd also like to take this opportunity to mention the importance of our reforms in the area of Australia's competition policy.

It's appropriate that this receives some attention at a Congress of people interested in consumer matters, as it is the consumer who benefits from robust, well-regulated competition.

As in consumer affairs, we have taken an activist approach to competition reforms – while ensuring all along that we get the balance right.

As in consumer affairs, there has been a catalogue of unfinished business – long called for reforms, which had been left unattended, with consumers suffering the consequences. Again, for years, the ACCC has been tasked with regulating for robust competition with one arm tied behind its back.

It was important to deal with the unsustainably high burden that the High Court imposed in establishing substantial market power in predatory pricing cases. I'm glad that our reform removing the necessity to prove the ability to recoup losses is now law – this is something that has been long called for as necessary to ensure robust competition to the benefit of consumers.

Our cartels criminalisation bill is progressing through the Parliament. As Graeme Samuel has said, cartel operators are thieves – usually well-dressed, but thieves nonetheless. This theft should be punishable by ten years prison if our Bill is agreed to in the Senate.

The Australian Financial Review recently said that the ACCC now has more powers at their disposal that at any time since its creation in the early 1970s.

They meant this as a criticism. I took it as a compliment.

It's appropriate that our competition laws are re-invigorated and that the competition and consumer watchdog be given real teeth.

Concluding remarks

The last 12 months have been an exciting time in consumer policy. I am greatly appreciative of the efforts of my state and territory colleagues and the input of consumer and business stakeholders. You have helped make these changes a reality.

But, we have a lot to do to continue to make Australia's markets fairer for consumers. In 12 months time, we will have new laws in place on unfair contract terms, and new penalties, enforcement powers and better redress mechanisms for consumers. We will also be close to finalising a new national product safety regime and a world-class, best practice Australian Consumer Law.

All of these things will go a long way to responding to the challenge posed in the theme of this congress. They will make our markets fairer for consumers. And, they will provide Australian consumers with confidence: confidence that the law works for them; confidence that the law protects them and confidence that the law lets them protect themselves.

I want to work with you all to achieve these ambitious goals and, while I can't be here for all of the Congress, I encourage you to debate and discuss the future of Australia's consumer laws.

I want to know what you think about these changes, so that I – with my State and Territory colleagues – can deliver a truly world class Australian Consumer Law and make our markets fairer.

Thank you